Problem
What is the equilibrium price for the demand and supply conditions described in exercises 1 and 2? How much corn is bought and sold? What if the price of diesel fuel increases to $4.50 per gallon? Show the equilibrium price before and after the change in a graph.
Exercises 1
Consider again the demand function for corn in formula (1). Graph the corresponding demand curve when potatoes and butter cost $0.75 and $4 per pound, respectively, and average income is $40,000 per year. At what price does the amount demanded equal 15 billion bushels per year? Show your answer using algebra.
Exercises 2
Consider again the supply function for corn in formula (2). Graph the corresponding supply curve when diesel fuel costs $2.75 per gallon and the price of soybeans is $10 per bushel. At what price does the amount supplied equal 21 billion bushels per year? Show your answer using algebra.
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.