Question

Assume a supply​ equation:

Q = 0.1p - 0.02pi + 0.01N + 0.01T - 0.1w
​where:
p​ = own price
pi​ = price of an input​ = ​$50
Q​ = quantity supplied​ (thousands of​ units)
N​ = number of firms ​= 100
T​ = index of technology​ = 300
w​ = wage rate​ = ​$30

The quantity supplied asa function as the price can be written: ____
If the price of the good is $16, what would be the quantity supplied? (in thousands units)

Answer 1

The quantity supplied as a function of the price is:

Q= 0.1p-0.02(50)+0.01(100)+0.01(300)-0.1(30)

Q= 0.1p-1+1+3-3

Q=0.1 p

If the price of the good is $16, the quantity supplied is:

Q=0.1 (16)

Q= 1.6 (thousands of units)