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Determining the equilibrium price and quantity for market

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Suppose Good X is sold in a competitive market and has a straight-line demand curve that cuts the price-axis at $150 and the quantity axis at 60,000 units, and the supply curve has the equation of QS X = 800P - 30,000

(a)Find the demand function.

(b) What will be equilibrium price and quantity for this market?

(c) What is the elasticity of demand at the equilibrium point?

(d) Based on the answer to (c), comment on whether the equilibrium point is profitmaximizing?

(a) During lunch or dinner hours, patrons of many restaurants need to wait for a long time before there are tables for them. Explain the concepts of "pecuniary price" and "full-economic price" using this example with a suitable diagram. An economics student comments on this phenomenon: "Sellers are not maximizing to let this phenomenon happen." Explain the rationale behind this student's comment and discuss whether you agree with it.

(b) As a manager, you would like to develop a demand equation for your restaurant, suggest FOUR variables might affect the demand for your firm. Explain briefly

One day, your uncle, the owner of electrical home appliance shop, obtained from a researcher the demand function for microwave oven. Qd = 120 - 1.07PM + 0.76Po - 3.5Pc + 5M + 0.5A, where Qd is the quantity microwave oven, PM is the price of a microwave oven, PO is price of oven, PC is the price of the containers, M is income and A is advertising expense and asked you to explain the meaning of this equation

(a) What general information can you obtain from this demand function? Try to explain to your father how he should interpret this equation.

(b) Your uncle wants to increase the total revenue from microwave oven; do you think that you can provide him any suggestions right now? What sort of additional information, if any, is required to have a valid recommendation?

Reference no: EM133036095

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