Question

Suppose there are two producers in a market with the following supply functions. Supply 1: P=6+0.7Q Supply 2: P=16+0.6Q Which of the following points is most likely not on the market supply curve? a. P=32.00,Q=61.14 b. P=11.00,Q=7.14 c. P=16,Q=14.29 d. P=24.00,Q=39.05

Answer 1

To determine if a point is on the market supply curve, we need to check if it satisfies both supply functions.

Supply 1: P = 6 + 0.7Q

Supply 2: P = 16 + 0.6Q

Let's evaluate each option:

a. P = 32.00, Q = 61.14

Using supply 1: P = 6 + 0.7(61.14) = 48.80

Using supply 2: P = 16 + 0.6(61.14) = 52.68

Neither supply function matches the given point, so it is not on the market supply curve.

b. P = 11.00, Q = 7.14

Using supply 1: P = 6 + 0.7(7.14) = 10.00

Using supply 2: P = 16 + 0.6(7.14) = 20.28

Neither supply function matches the given point, so it is not on the market supply curve.

c. P = 16, Q = 14.29

Using supply 1: P = 6 + 0.7(14.29) = 15.00

Using supply 2: P = 16 + 0.6(14.29) = 24.57

Both supply functions match the given point, so it is likely on the market supply curve.

d. P = 24.00, Q = 39.05

Using supply 1: P = 6 + 0.7(39.05) = 33.34

Using supply 2: P = 16 + 0.6(39.05) = 39.43

Both supply functions match the given point, so it is likely on the market supply curve.

Based on the analysis, the most likely point that is not on the market supply curve is option a. P = 32.00, Q = 61.14.