Demand analysis

# That system are in balance so that there is no

• Notes
• 18

This preview shows page 16 - 18 out of 18 pages.

that system are in balance, so that there is no  tendency for the variables in the system to change  (GR 1992).  Existence Stability Uniqueness Concept of equlibrium

Subscribe to view the full document.

The inverse demand curve for product X is given by:  PX = 25 - 0.005Q + 0.15PY,  where PX represents price in dollars per unit, Q represents rate of sales in pounds per week, and PY represents selling price of another product Y in dollars per unit.  The inverse supply curve of product X is given by: PX = 5 + 0.004Q. a. Determine the equilibrium price and sales of X. Let PY = \$10.  b. Determine whether X and Y are substitutes  or complements.  Excercise
a .   Equate supply to demand to calculate Q.  25 - 0.005Q + 0.15(10) = 5 + 0.004Q  21.5  = 0.009Q  Q = 2,388.9 units per week  At Q = 2,388.9,   P = 25 - .005(2,388.9) +  0.15(10)  = \$14.56 per unit.  b.   Since we can solve for quantity demanded  as a function of prices,  Answer:   005 . 0 15 . 0 25 x y P P Q - + =
You've reached the end of this preview.
• Spring '12
• AbhinavDhar

{[ snackBarMessage ]}

### What students are saying

• As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

Kiran Temple University Fox School of Business ‘17, Course Hero Intern

• I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

Dana University of Pennsylvania ‘17, Course Hero Intern

• The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

Jill Tulane University ‘16, Course Hero Intern