Principles of Economics (12th Edition)
12th Edition
ISBN: 9780134078779
Author: Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher: PEARSON
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Chapter 14, Problem 3.3P
To determine
Business strategies.
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The widget market is competitive and includes no transaction costs. Five suppliers are willing to sell one widget at the following prices: $30, $20, $10,
$5, and $3 (one seller at each price). Five buyers are willing to buy one widget at the following prices: $10, $20, $30, $38, and $44 (one buyer at
each price).
For each price shown in the following table, use the given information to enter the quantity demanded and quantity supplied.
Quantity Demanded
Quantity Supplied
(widgets)
Price
($ per widget)
$3
$5
$10
$20
$30
$38
$44
(widgets)
The widget market is competitive and includes no transaction costs. Five suppliers are willing to sell one widget at the following prices: $18, $14, $12,
$6, and $3 (one seller at each price). Five buyers are willing to buy one widget at the following prices: $12, $14, $18, $28, and $34 (one buyer at
each price).
For each price shown in the following table, use the given information to enter the quantity demanded and quantity supplied.
Quantity Demanded Quantity Supplied
(widgets)
(widgets)
Price
($ per widget)
$3
$6
$12
$14
$18
$28
$34
In this market, the equilibrium price will be
per widget, and the equilibrium quantity will be
4
5
0
3
1
2
widgets.
Suppose that managers at Honda are deciding how to price the new Honda Accord. The managers estimate that their total costs increase by $20,000 for each car they produce. They also estimate the demand curve they face; it is described by the equation:
Q = -0.4 P + 16,000,
where Q represents the quantity of Honda Accords they will sell and P represents the price they charge in US dollars.
We can re-write that demand curve as:
P = 40,000 - 2.5 Q.
Take every possibly quantity that the managers might choose between 0 and 7,000 in units of 100. For each possible quantity, calculate the associated price the managers would need to charge, the revenue they would earn, and the total costs. You can then calculate profits for each level of quantity. Highlight the cell that contains the highest value of profit.
Chapter 14 Solutions
Principles of Economics (12th Edition)
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