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    munzy12's Avatar
    munzy12 Posts: 2, Reputation: 1
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    #1

    Jan 5, 2016, 02:17 PM
    Please help me regarding calculating equilibrium price
    Suppose that there are 20 million consumers in the economy. There are two types ofconsumers Ė types A and B, and there are 10 million type-A consumers as well as 10million type-B consumers. Each type-A consumerís demand for meat products isdescribed as follows:
    𝐷! =5−0.2𝑝,for𝑝 ≤25,𝐷! =0,for𝑝 ≥25.
    where 𝐷! Is a type-A consumerís demand for meat products (i.e. 𝐷! Kg) and 𝑝denotes the price of meat products (i.e. £𝑝/kg). Each type-B consumerís demand formeat products is described as follows:
    𝐷! =6−0.3𝑝,for𝑝 ≤20,𝐷! = 0, for 𝑝 ≥ 20.
    where 𝐷! Is a type-B consumerís 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's Avatar
    Curlyben Posts: 18,484, Reputation: 1858
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    #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's Avatar
    munzy12 Posts: 2, Reputation: 1
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    #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.

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