Please use Problem 1&2 to solve problem 3&4 thanks Problem 1: Given the market m

Question

Please use Problem 1&2 to solve problem 3&4 thanks

Problem 1: Given the market model

        d = Qs

        d = 21-3P

        s = -4 + 8P

Find P* and Q* by (a) elimination of variables and (b) using formulas (3.4) and (3.5).

(use fractions rather than decimals)

Problem 2: Let the demand and supply functions be as follows:

Qd = 51 – 3P         Qs = 6P - 10

Qd = 30 – 2P          Qs = -6 + 5P

Problem 3. According to (3.5), for Q* to be positive, it is necessary that the expression (ad-bc) have the same algebraic sign as (b+d). verify that this condition is indeed satisfied in the models of probs. 1and 2.

Problem 4. If (b+d) = 0 in the linear market model, can an equilibrium solution be found by using (3.4) and (3.5)? why or why not?

Explanation / Answer

Q 1
d = 21-3P
s = -4 + 8P
d=s
21-3P=8P-4
11P=25
P=25 /11

S=8*(25/11)-4
=156/11

Rest of the questions are not clear.

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