# Supply, demand & equilibrium 7

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| According to our standard model of supply and demand, which of the following definitely predicts an increase in both the current price of coffee and the current quantity of coffee produced? An increase in wages paid to workers on coffee farms. An improvement in coffee-growing weather in coffee-growing countries. Correct Answer' _ An increase in incomes, assuming coffee is a normal good. [ A decrease in the price of tea. The expectation that Brazil's coffee harvest will be especially large next year See your notes from tutorial. In a perfectly competitive market, market (inverse-)demand is P(Q%)=300/5 - Q4/5 while market (inverse-)supply is P(Q%)= 60/4 + Q%/4. What is the equilibrium price? ¢ Round to two decimal places. If your answer is 1.125, enter 1.13. ¢ Do not enter a currency symbol. | Correct Answer 40 Method 1, invert both equations to get quantity as a function of price. Set them equal to each other and solve for price. Method 2: Set the given equations equal to each other to get the equilibrium quantity. Insert equilibrium quantity into either of the given equations to get equilibrium price
Assume quantities must be integers. According to the following supply schedule, what is the marginal cost of unit number 77 Round to two decimal places and do not enter the currency symbol. If your answer is 1.125, enter 1.13. Q% 1 2 3 4 5 6 7 8 9 10 11 P: 0.50 X2.00 X4.50 X8.00 X12.50 |X18.00 324.50 [X32.00 40.50 [350.00 60.50 | 1 Correct Answer 24.5