## Question

###### Q2. Consider the general supply function: Qs = 1,000 + 20 P - 9 PI +25...

Q2. Consider the general supply function:

Q_{s} = 1,000 + 20 P - 9 P_{I} +25 F

*Q** _{s}* = quantity supplied

*P* = price of the commodity

*P** _{I}* = price of a key input in the production process

*F =* number of firms producing the commodity

b. Derive the equation for the supply function when *P** _{I}* = $480 and

*F*= 60.

*(1 point)*

c. Sketch a graph of the supply function in part *b.* At what price does the supply curve intersect the price axis? Give an interpretation of the price intercept of this supply curve.

d. Using the supply function from part *b,* calculate the quantity supplied when the price of the commodity is $1,000 and $1,500.

e. Derive the inverse of the supply function in part *b.* Using the inverse supply function, calculate the supply price for 40,000 units of the commodity. Give an interpretation of this supply price.

f. Suppose the supply curve for good X passes through the point P = $35, Qs = 2,500. Give two interpretations of this point on the supply curve.