Suppose the estimated supply function for avocados is given by QS = 48 + 15p – 10pf , where pf is the price of fertilizer. The estimated demand for avocados is given by Qd = 233 – 40p + 5pt , where pt is the price of avacados per pound.a. (3) Solve for the initial equilibrium price and quantity of avocados when the price of fertilizer, pf , is equal to $0.90 per lb. and the price of avacados, pt, is equal to $0.80 per lb.b.Solve for the initial equilibrium price and quantity of avocados if the price of fertilizer, pf , increases to $2.00 per lb. and the price of avacados, pt, remains $0.80 per lbc. Use these equilibrium values from parts a. and b. to solve for the price elasticity of demand for avocadosd. Given your calculations, are avocados elastic, inelastic or unit-elastic? How have total expenditures on avocados changed as a result of the change in the price of fertilizer?
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