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Consider a drug shop that sells malaria treatment. Product can be stored costlessly from dry to rainy reason but it is impossible to store any crop from rainy to dry season. Dry season demand for malaria treatment is Xd=120-4Pd and the supply of malaria treatment in the dry season is Xd= 6Pd . Rainy season demand for malaria treatment is Xr=360-4Pr and the supply of malaria treatment in the rainy season is Xr=6Pr Compute Pr,Xr equilibrium , and Pd,Xd , and the amount of hoarding or speculation (storage) from dry to rainy season. (Hint: Think like a producer – how can you make the most money? What about arbitrage? Another hint: you can think about calculating hoarding by adding or subtracting a variable that represents hoarding to your demand and supply functions).
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