(Advanced analysis) Answer the question on the basis of the following information. The demand for commodity X is represented by the equation P = 10 - 0.2Q and supply by the equation P = 2 + 0.2Q. Refer to the given information. If demand changed from P =
10 - .2Q to P = 7 - .3Q, the new equilibrium price is:
A. $2.
B. $4.
C. $6.
D. $7.
Answer: B
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In the above figure, if the two goods A and B, are complements, which of the following is TRUE?
A) The shift from D0 to D1 for good B leads to a shift from S0 to S1 for good A. B) The shift from S0 to S1 for good A leads to the shift from D0 to D1 for good B. C) The law of demand is violated in both markets. D) The cross elasticity of demand between them is positive.
If Farmer Sam MacDonald can produce 200 pounds of cabbages and 0 pounds of potatoes or 0 pounds of cabbages and 100 pounds of potatoes and faces a linear production possibilities curve for his farm, the opportunity cost of producing an additional pound of potatoes is _____ _ pound(s) of cabbage.
A) 1/2 B) 2 C) 100 D) 200