The demand and supply curves for the market are given by: Demand: Qd = 16000 – 24P Supply: Qs = 2000 + 32P
A maximum price of $200 is proposed.
(ii) Calculate the reservation price for the seller (to the nearest whole number)
The supply equation is given as 2000+32P
The reservation price would be
Set QS=0,
0 = 2000+32P
32P = 2000-0
P = 2000/32 = 62.5
The reservation price for the seller = 62.5
The demand and supply curves for the market are given by: Demand: Qd = 16000 –...
Question 5e, f and g The demand and supply curves for the market are given by: Demand: Qd = 16000 – 24P Supply: Qs = 2000 + 32P A maximum price of $200 is proposed. (e) Does the imposition of the maximum price result in net welfare gains? Explain. (4 marks) (f) Would you advise the implementation of the maximum price? Explain. (3 marks) (g) Suggest an alternate strategy. (2 marks)
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