Bybee and Caymark made glass paperweights back in the 20th century and their products are now considered antiques. There are 150 existing Bybee paperweights and the demand function for Bybee paperweights is given by Db(Pb Pc) = 250 – 2Pb 2Pc where Pb is the price of a Bybee paperweight and Pc is the price of a Caymark paperweight. There are 100 existing Caymark paperweights and their demand function is given by Dc(Pc Pb) = 200 – 5Pc 2Pb. Find the equilibrium prices of Bybee andCaymark paperweights. Sketch a supply and demand diagram for each market. Suppose a sinkhole develops at the Bybee Museum in Richmond Kentucky and swallows up 40 of the Bybee paperweights. Calculate the new equilibrium prices of Bybee and Caymark paperweights. Show the effect of sinkhole in your supply and demand diagrams. Are Bybee paperweights a gross substitute or gross complement of Caymark paperweights? Are Caymark paperweights a gross substitute or gross complement of Bybee paperweights? Explain your answers.
