Chapter 2 Supply and Demand 1 Suppose that the demand functi

Chapter 2. Supply and Demand 1. Suppose that the demand function for corn is Qorn 20-4Pcorn+ 8Ppotatoes 0.50 Putter (a). If potatoes cost $0.25 per pound and butter costs $2 per pound, what is the (b). At what price of corn will consumers demand 8 billion bushels per year? demand function?

Solution

a> The demand function will be

Q=20-4P+8x0.25-0.5x2=21-4P

Q=21-4P

b> If Q=8, then 4P=13, so P=$3.25