¶ … change: for question 4e, find the new equilibrium P. And Q, but you do NOT need to answer the questions - What is the effect on supply?
0=3000-10p
p=300
0=-1000+10p
1000=10p
p=1000
3000-10p=-1000+10p
4000=20p
p=200
3500-10p=-1000+10p
4500=20p
p=225
Chapter 3,-Page 71 Number 6.
Q=200-300p+120i+65t-250 Ac+400 Aj
3750 + 4000 = 5100 cups demand curve Q=200-300P+120(10)+65(60)-250(15)+400(10)
The effect is to raise the y-intersect of the demand curve by 5000 units, but not to change the slope of the demand curve.
250(5000)=400(Aj)
Aj= 3125
She would have to expend $3,125 to counteract the competitors advance.
Chapter 4,-Page 106 Number 6.
=%change in quantity / percentage change in price
((x- 4000)/4000)/((70-63)/70)
((x-4000)/4000)*10=2.5
.25=x-4000/4000
1000=x-4000
x=5000
will revenue increase
Yes -- revenue will increase. Why?
The initial condition, with price at 70, yields 70(4000)=280000
The next condition, with price at 63, yields 63(5000)=315000
4) Chapter 4,-Page 107 Number 15.
a. 20
(3.5-3)/(3)
.20/.1666
- 1.25
b. Sales of chocolate syrup increased because chocolate syrup is a complementary good to vanilla ice cream. The more people eat vanilla ice cream, the more they eat chocolate syrup. You would measure the effect by noting the % price difference in ice cream related to the % change in purchases of chocolate syrup.
c. Effect on total revenue = total revenue should increase, because changing the price by 16% created a 20% change in quantity sold.
5) Chapter 4, Answer the following question which is based on Page 107, Number 17 but has some changes:
The demand curve for product X is given as Q = 2000-20P.
a. How many units will be sold at $10?
Q=2000-20(10)=1800
b. At what price would 2,000 units be sold? 0 units? 1,500 units?
2000=2000-20P -- at no price -- to sell 2000 units, price must be $0.
0=2000-20p
P=100
To sell 0 units, price must be 100.
1500=2000-20p
-500=-20p
p=25
c. Write the equation for total revenue (in terms of P, that is, the equation will include the variable P. But will not include the variable Q).
Total revenue formula
Revenue=price x quantity
R = p (2000-20P)
R= 2000P -20P^2
d. What will be the total revenue at a price of $70?
140000-98000=42,000
e. What is the elasticity between $65 and $75?
% change in quantity demanded/% change in price
(500-700)/500
-.4/((75-65)/65)
-.4/0.15= -2 2/3
f. If price were to decrease to $60, what would total revenue be?
(2000)(60)-20(60^2)
1200000-72000= 48,000
g. What would be the elasticity between $55 and $65?
(700-900)/700 = - 0.28
(65-55)/55 = .18
