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Equilibrium Price and Market Demand of Frozen Yogurt

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The Market Demand for Joy's Frozen Yogurt is given as:

Qd=-100P+1.5Phd-5Psd+20A+15Pop

Where Qd= Annual demand for frozen yogurt

Phd= Price of hot dogs
Psd= Price of soft drinks
A= Advertising expenditures
Pop= Percentage of the population

Considering the demand equation of QD=-100p+700,and assuming that the supply equation is given as Qs=-100+100P,how do you find the equilibrium price and quantity? If the producer is given a $2 subsidy, how do you find the new equilibrium price and quantity?

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Solution Summary

This solution calculates the equilibrium price based on supply and demand curves. It also calculates the revised equilibrium based on a subsidy.

Solution Preview

At equilibrium the quantity demanded is equal to the quantity supplied. Therefore:
Qd = -100 P + ...

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