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The Quantity of Coffee Demanded, QD, Depends on the Price

Question 49

Essay

The quantity of coffee demanded, QD, depends on the price of coffee, Pc, and the price of tea, PT. The quantity of coffee supplied, QS, depends on the price of coffee, Pc, and the price of electricity, PE , according to the following equation: QD=172Pc+10PTQS=2+3Pc5PE\begin{array} { l } Q ^ { D } = 17 - 2 P _ { \mathrm { c } } + 10 P _ { \mathrm { T } } \\Q ^ { \mathrm { S } } = 2 + 3 P _ { \mathrm { c } } - 5 P _ { \mathrm { E } }\end{array}
a. If the price of teais $1.00\$ 1.00 and the price of electricity is $0.50\$ 0.50 , what is the equilibrium price and quantity of coffee?
b. What is/are the endogenous variable(s) in this model?
c. What is/are the exogenous variable(s) in this model?

Correct Answer:

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a. The equilibrium p...

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