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    Calculating equilibrium price and quantity level

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    The market demand and supply functions of copper are as follows:
    QD = 10 -50PC + 0.3I + 1.5TC + 0.5E where:
    QD = quantity demanded of copper (millions of pounds)
    PC = price of copper ($ per pound)
    I = consumer income index
    TC = telecom index
    E = expectation index
    QS= -86 + 90PC â?" 1.5W + 0.5T + 0.4N where:
    QS = quantity supplied of copper (millions of pounds)
    PC = price of copper ($ per pound)
    W = an index of wage rates in the copper industry
    T = technology index
    N = number of active mines in the copper industry.

    (A) Given the following values for the non-price variables, find the market equilibrium price (PE) and quantity (QE):
    I = 100, TC=10, E=30, W=10, T=30, N=40

    (B) Discuss the impacts on the market equilibrium price (PE) and quantity (QE) of a 10 percent increase in consumer income index.

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    https://brainmass.com/economics/demand-supply/calculating-equilibrium-price-and-quantity-level-397974

    Solution Preview

    (A) Given the following values for the non-price variables, find the market equilibrium price (PE) and quantity (QE):
    I = 100, TC=10, E=30, W=10, T=30, N=40

    QD = 10 - 50PC + 0.3I + 1.5TC + 0.5E
    Put various values of given parameters
    QD=10-50PC+0.3*100+1.5*10+0.5*30=70-50PC

    QS= -86 + 90PC- 1.5W + ...

    Solution Summary

    Solution describes the steps to calculate equilibrium price and quantity level. It also analyzes the impact of a rise in income level on equilibrium parameters.

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