Question

Consider the market for orange juice. In this market, the supply curve is given by QS = 100PJ −20PO and the demand curve is given by QD = 1000−150PJ +100PC, where J denotes orange juice, O denotes Orange, and C denotes coffee.

Answer 1

The market for orange juice is in equilibrium when the quantity supplied is equal to the quantity demanded. We can find the equilibrium point by setting QS = QD and solving for the price of orange juice (PJ).

QS = 100PJ −20PO
QD = 1000−150PJ +100PC

Setting QS = QD, we get:
100PJ −20PO = 1000−150PJ +100PC

Solving for PJ, we get:
PJ = (1000 + 20PO - 100PC)/250

Therefore, the equilibrium price of orange juice (PJ) is dependent on the price of oranges (PO) and the price of coffee (PC).

Also, we can find the equilibrium quantity of orange juice by substituting the equilibrium price into either the supply or demand equation.

QS = 100PJ -20PO
QD = 1000 -150PJ +100PC

As the value of QS=QD, we can substitute either of the equation and find the value of Q.