If the supply curve is given by the equation P 10 + 4Q, and the demand...

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If the supply curve is given by the equation P 10 + 4Q, and the demand curve is given by the equation P 185-10Q, then a price

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Answer 1

Answer #1

1. D. $43.75

Reason-

Supply= P=10+4Q

Demand =P=185-10Q

Equilibrium Price and Quantity=

10+4Q=185-10Q

14Q=175

Q*=12.5

P*= $60

Price Ceiling= $50

Supply at $50, 50=10+4Q

Q=10

Price paid by consumers at Q=10

P=185-10(10)

P=$85

Deadweight loss= 0.5*(85-50)*(12.5-10)=$43.75

2. D. 4.2

Reason-

Demand curve= P=254-30Q

Total revenue= P*Q= (254-30Q)*Q= 254Q-30Q^2

To find the quantity where total revenue will be maximized, differentiate TR and equate it to zero.

dTR/dQ= 254-60Q=0

Q=4.2

3.A. $366.94, 11.898

Reason-

Demand curve= P=593-19Q

TR= P*Q= 593Q-19Q^2

MR= dTR/dQ= 593-38Q

MC=10+11Q

Monopoly produces where MC= MR

593-38Q=10+11Q

583=49Q

Q*=11.898

Plug the quantity in inverse demand equation

P*=593-19(11.898)= $366.94

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