Essay
The quantity of coffee demanded, Qd, depends on the price of coffee, Pc, and the price of tea, PT. The quantity of coffee supplied, Qs, depends on the price of coffee, Pc, and the price of electricity, PE , according to the following equation:
Qd = 17 - 2Pc + 10PT
Qs = 2 + 3Pc - 5PE
a.If the price of tea is $1.00 and the price of electricity is $0.50, what are the equilibrium price and quantity of coffee?
b.What is/are the endogenous variable(s) in this model?
c.What is/are the exogenous variable(s) in this model?
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