Question

The supply function for good X is given by Qxs = 1,000 + PX - 5PY - 2PW, where PX is the price of X, PY is the price of good Y and PW is the price of input W. If the price of input W increases by $10, then the supply of good X

Answer 1

Answer:

Will increase by 10 units

Explanation:

Given the formula for quantity supplied Qxs = 1,000 + PX - 5PY - 2PW

We are told to gauge the effect of increase in input (W) on quantity supplied (Qxs)

So assuming this protein of the equation is constant

1,000 + PX - 5PY= k

That is there is no change in price of X and Y

Qxs= k- P(W)

So it can be seen that an increase in P(W) is a negative change in the equation

Qxs k - ∆10

Resulting in reduction in Qxs by 10