Answer to Question #160260 in Macroeconomics for Audrey

Question

The Marketing Department reckons that the supply function for Ethyl Alcohol is given by

 Q_x^S=5,000+2P_x-3P_y- P_w

Where P_x is the price of ethyl alcohol, P_r represents the price of Isopropyl Alcohol, and P_w is the price of input used to produce ethanol. Given that the amount of ethyl alcohol sells at P40 per unit, isopropyl alcohol is sold for P35 per unit; and the price of inputs is P2,000. How much ethyl alcohol is produced?

Answer 1

$$Q_x^S=5000+2\cdot40-3\cdot35-2000=2975.$$

2975 units of ethyl alcohol is produced.