 Ask Remember Me? munzy12 Posts: 2, Reputation: 1 New Member #1 Jan 5, 2016, 02:17 PM
Suppose that there are 20 million consumers in the economy. There are two types ofconsumers  types A and B, and there are 10 million type-A consumers as well as 10million type-B consumers. Each type-A consumers demand for meat products isdescribed as follows:
𝐷! =5−0.2𝑝,for𝑝 ≤25,𝐷! =0,for𝑝 ≥25.
where 𝐷! Is a type-A consumers demand for meat products (i.e. 𝐷! Kg) and 𝑝denotes the price of meat products (i.e. £𝑝/kg). Each type-B consumers demand formeat products is described as follows:
𝐷! =6−0.3𝑝,for𝑝 ≤20,𝐷! = 0, for 𝑝 ≥ 20.
where 𝐷! Is a type-B consumers demand for meat products (i.e. 𝐷! Kg).
The aggregate supply of meat products (𝑆 kg) in the economy is described by the
following supply function:

[IMG]file:///page1image11536[/IMG] [IMG]file:///page1image11696[/IMG] [IMG]file:///page1image11856[/IMG] 𝑆 = 5,000,000𝑝.kg when 𝑝 = 10.

(b) Verify that the equilibrium price of meat products is £11/kg (i.e. 𝑝 = 11) and theequilibrium quantity is 55 million kg in the economy. (10 marks) Curlyben Posts: 18,509, Reputation: 1860 BossMan #2 Jan 5, 2016, 02:24 PM
What do YOU think ?
While we're happy to HELP we wont do all the work for you.
Show us what you have done and where you are having problems.. munzy12 Posts: 2, Reputation: 1 New Member #3 Jan 8, 2016, 11:57 AM
Hi sorry I didn't clarify my approach to the question. I got there in the end :) However another question is as follows:Suppose now that a tax on meat products is introduced. The tax rate is 25%.(I) Verify that the equilibrium quantity of meat products in the economy is 440/9 million kg... Do you know how I can go about verifying this? I would think the tax rate changes the aggregate demand / supply equations to incorporate tax and then I'd be able to work out equilibrium price and quantity. I just can't seem to adjust the original equations to add the tax. I would really appreciate help to atlas get started.

 Question Tools Search this Question Show Printable Version Email this Page Search this Question: Advanced Search