Fast Food A fast-food outlet finds that the demand equation for its new side dish, “Sweetdough Tiidbit,” is given by p = 128 ( q + 1 ) 2 , where p is the price (in cents) per serving and q is the number of servings that can be sold per hour at this price. At the same time, the franchise is prepared to sell q = 0.5 p − 1 servingsper hour at a price of p cents. Find the equilibrium price p ¯ and the consumers’ and producers’ surpluses at this price level. What is the total social gain at the equilibrium price? [ HINT: See Example 3.]
Fast Food A fast-food outlet finds that the demand equation for its new side dish, “Sweetdough Tiidbit,” is given by p = 128 ( q + 1 ) 2 , where p is the price (in cents) per serving and q is the number of servings that can be sold per hour at this price. At the same time, the franchise is prepared to sell q = 0.5 p − 1 servingsper hour at a price of p cents. Find the equilibrium price p ¯ and the consumers’ and producers’ surpluses at this price level. What is the total social gain at the equilibrium price? [ HINT: See Example 3.]
Fast Food A fast-food outlet finds that the demand equation for its new side dish, “Sweetdough Tiidbit,” is given by
p
=
128
(
q
+
1
)
2
,
where p is the price (in cents) per serving and q is the number of servings that can be sold per hour at this price. At the same time, the franchise is prepared to sell
q
=
0.5
p
−
1
servingsper hour at a price of p cents. Find the equilibrium price
p
¯
and the consumers’ and producers’ surpluses at this price level. What is the total social gain at the equilibrium price? [HINT: See Example 3.]
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