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Supply and Demand ProblemsQ=2000 - 100 P, where Q is cap sales and P is price.A. how many caps could be sold at $ 12 each?Q = 2000-100(12)Q = 800 capsB. what should the price be in order the company to sell 1000 caps?1000 =2000 - 100 P100 P = 1000 P=$10C. at what price would cap sales equal o zero?Q =2000-200 P2000-200 P =0P = $20Consider the following supply and demand curves for a certain product.QS = 25,000PQD = 50,000- 10,000PPlot the demand supply and curve.When QS is 0, P is 0.When QD is 0, P is $5 P ($)5SQDWhat are the equilibrium price and equilibrium quantity for the industry? Determine the answer in algebraically and graphically.P ($)5S1.43DQQS = QD25,000P = 50,000- 10,000P50,000 = 35,000 PP = $1.43When P = $1.43, QD = 50,000- 10,000(1.43)QD = 35700Thus equilibrium price is $1.43 while equilibrium quantity is 35700 unitsQD = 65,000 -10,000PQS = -35,000 + 15,000 PWhere Q is the quantity and P is the price of a poster, in plete the following table.PriceQSQDSurplus or shortage$ 6.0055,0005000surplus5.0040,00015,000Surplus4.0025,00025,000equilibrium3.0010,00035,000Shortage2.00-500045,000Shortage1.00-20,00055,000shortageWhat is the equilibrium price?QD = QS. Thus, Price is $ 4.00The following relations describe monthly demand and supply for computer support service catering to small business.QD = 3,000 – 10PQS = -1,000 + 10PWhere Q is number businesses that need services and P is the monthly fee, in dollar.At what average monthly fee would demand equal zero?QD = 3000-10P3000-10P = 010P = 3000P=$300At what average monthly fee would supply equal zero?QS = -1000+10P-1000+10P = 010P = 1000P=$100Plot the supply and demand curve.P ($)300S200100QDWhat is the equilibrium price/output level?QD = QS3000 –10P = -1000+ 10P4000 = 20PP = $200Suppose demand increase and leads to new demand curve:QD = 3500 ? 10P What is the effect on supply? What are the new equilibrium P & Q?When demand increase, supply will increase. QD = 3500- 10P, When QD is 0, P is $350QS= -1500+10P, When QS is 0, P is $150Thus, new equilibrium P & Q is $250The ABC marketing consulting firm found that a particular brand of portable stereo has the following demand curve for a certain region:Q = 10,000 ? 200 P +0.03Pop +0.6 I + 0.2AWhere Q is the quantity per month, P is price ($), Pop is pollution, I is disposable income per household (S), and A is advertising expenditure ($).Determine the demand curve for the company in a market in which P = 300 Pop = 1,000,000I = 30,000A = 15,000Q = 10,000 ? 200 (300) +0.03 (1,000,000) +0.6 (30,000) + 0.2 (15,000)Q = 1000Calculate quantity demanded at prices of $200, $175, $150 and $125.At $200;Q = 10,000 ? 200 (200) +0.03 (1,000,000) +0.6 (30,000) + 0.2 (15,000)Q = 21,000At $175;Q = 10,000 ? 200 (175) +0.03 (1,000,000) +0.6 (30,000) + 0.2 (15,000)Q = 26,000At $150;Q = 10,000 ? 200 (150) +0.03 (1,000,000) +0.6 (30,000) + 0.2 (15,000)Q = 30,000At $125;Q = 10,000 ? 200 (125) +0.03 (1,000,000) +0.6 (30,000) + 0.2 (15,000)Q = 36,000Calculate the price necessary to sell 45,000 units.45,000 = 10,000 ? 200 P +0.03 (1,000,000) +0.6 (30,000) + 0.2 (15,000)45,000 = 61,000 ? 200 PP = $80Joy’s Frozen Yogurt shops have enjoyed rapid growth in northeastern. States in recent years. From the analysis of joy’s various outlets, it was found that the demand curve follows this pattern:Q = 200 – 300P + 120I + 65T – 250AC + 400 AjWhere Q = Number of cups served per weekP = average price paid for each cup I = Per capita income in the given market (thousands)T = Average outdoor temperature AC = Competition’s monthly advertising expenditures (thousands)Aj = Joy’s own monthly advertising expenditure (thousands)One of the outlets has the following conditions: P = 1.50, I = 10, T= 60, AC = 1.5, Aj = 10.Estimate the number of cups served per week by this outlet. Also determine the outlet’s demand curve.Q = 200- 300 (1.50) + 120 (10) + 65(60) – 250(15) + 400 (10)= 51005100 = 200 – 300(1.50) + 120 (10) + 65 (60) – 250 (15) + 400(10)5100 = 200 – 300P + 1200 +3900 – 3750 + 400 = 200 – 300P + 1750300P = 200 + 1750 – 5100P = -10.5P1.5Q5100What would be the effect of a $5,000 increase in competitor’s advertising expenditure? Illustrate the effect on the outlet’s demand curve.Q= 200 – 300 (1.50) + 120 (10) + 65 (60) – 250 (5015) + 400 (10)= -1244900P1.5Q-12449009) Q=1000-3000P+10AWhen P=$3 and A=$2000, Q=1000-3000(3) +10(2000) =12000When P=$2.50 and A=$2000, Q=1000-3000(2.50) +10(2000) = 13500. Thus, it beneficial, because higher quantity demandedWhen P=$4 and A=$2100 Q=1000-3000(4) +10(2100) = 10000. Thus, it is not beneficial, because lower quantity demanded. ................
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