The domestic demand and supply for sugar are Q^d = 700 − 2P and Q^SD = 100 + 4P.The foreign supply is Q^SF = 150 + 3P.What is the domestic market price of sugar?

Question

Quizplus · Accepted Answer

We need to find the domestic market price, which is where the domestic supply and demand intersect. Setting Q^d equal to Q^SD and solving for P, we get P = 80. However, this is not within the range of the foreign supply function, which starts at P = 151. Therefore, we need to find where the domestic supply and foreign supply intersect. Setting Q^d equal to Q^SF and solving for P, we get P = 75. This is within the range of the foreign supply function, so the domestic market price of sugar is $90 (i.e. the price where domestic demand and supply intersect). Therefore, the correct answer is C.

The Domestic Demand and Supply for Sugar Are Qd =

The Domestic Demand and Supply for Sugar Are Q^d =