Answer to Question #52470 in Microeconomics for Priscilla
The demand function for rose is Q=a-bp, and the supply function is Q=c+ep+ft, where a, b, c, e, and f are positive constants and t is the average temperature in a month. Show how the equilibrium quantity and price vary with temperature?
Qd = ap-b, Qs = c+ep+ft. In equilibrium Qd = Qs, so: apb = c+ep+ft p*(e + b) = a - c - ft p = (a - c - ft)/(e + b) So, equilibrium price increases, when the temperature falls and equilibrium quantity falls too.