Aretail chain will buy 900 cordless phones if the price is $40 each and 700 if the price is $60. a wholesaler will supply 550 phones at $30 each and 1250 at $50 each. assuming that the supply and demand functions are linear, find the market equilibrium point and explain what it means.
The point of equilibrium is (40,900).
It is given that the supply and demand functions are linear.
From the given information it is noticed that the demand function passing through the points (40,900) and (60,700). The supply function passing through the points (30,550) and (50,1250).
If a line passing through two points, then the equation of line is
The demand function is
The demand function is .
The supply function is
The supply function is .
Equilibrium is the point where the demand and supply are equal.
On solving (1) and (2), we get
Therefore the point of equilibrium is (40,900). It means the retailer can buy 900 phones for $40 each and the wholesaler can sale 900 phones for $40.
Step-by-step explanation: .
1. q = 60 million doses
2. 360 millions
The cost function C(q) = 5,000 + 0.1q²
Then, the Marginal cost MC =
Again, inverse demand curve p(q) = 18 - 0.2 q
Then the total revenue TR =
Also; the marginal revenue MR =
= 18 - 0.1q
In the bid to maximize profits from BBG; MR = MC
18 - 0.1 q = 0.2 q
0.3 q = 18
q = 18/0.3
q = 60 million doses
At the profit maximizing output, the price charged will be equal to :
Thus; producer surplus of Olderna at the monopoly price and quantity = price × quantity
= $6 × 60 millions
= 360 millions
The interest work (demand function) shows the connection between the amount requested of an item by the buyers and the cost of the item. These capacities are likely the main apparatuses utilized by financial analysts.