Answer in Microeconomics for Pawan #173220
March 27th, 2023
a. The market for vanilla ice cream is given by the following information:
= 800 − 30
+ 10
= 250 + 30
− 10
Where
is the quantity demanded,
is quantity supplied,
is the price of vanilla ice
cream,
is the price of chocolate ice cream and is the price of milk.
At equilibrium, supply is equal to demand. So;
“Qd=Qs”
“(800-30Pv+10Pc)=(250+30Pv-10Pm)”
We know that “Pc=10” and “Pm=5”
hence; “800-30Pv+10(10)=250+30Pv-10(5)”
“30Pv+30Pv=800+100+50-250”
“Pv=12” , which the price of Vanilla ice cream at equilibrium.
Therefore, quantity supplied at equilibrium is “250+30(12)-10(5)”
“=560”
The quantity demanded at equilibrium will be “800-30(12)+10(10)”
“=540”
