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(10 marks) Suppose the market for apples is represented by: Supply: Demand: -p Q-36-3p Find the market equilibrium price and
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Answer #1

17 for equilibrings a Destead asupping 36-3p2 = P2 36-4p2 P²9 (p = $3 equilibrium price b Qapa (312 Q = 9) - equilibrion qurn- 6P xP 30-12 -6p2 = 30-p- When (p= $3) - 6x1302 36-9132 - 6x9 27 IPED = -2] - (elastic despord)

Here we can clearly see that the the value of price elasticity of demand is greater than 1 which means the demand is elastic in nature

If the demand is elastic it means even there is a small change in price can cause heavy change in the quantity demanded

In this case revenue will increase only when price is not very high because even the producer try to change little bit of price then quantity demanded may go down highly and revenue will be affected as much

So he producer has to ensure that the the price has to be kept competitive so that the revenue will generate more

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