Retailers will buy 45 cordless phones from a wholesaler if the price is $10 each but only 20 if the price is $60. The wholesaler will supply 35 phones at $30 each and 42 at $42 each. Assuming the supply and demand functions are linear, find the market equilibrium point .
A) market equilibrium point:
B) market equilibrium point:
C) market equilibrium point:
D) market equilibrium point:
E) market equilibrium point:

Question

Retailers will buy 45 cordless phones from a wholesaler if the price is $10 each but only 20 if the price is $60. The wholesaler will supply 35 phones at $30 each and 42 at $42 each. Assuming the supply and demand functions are linear, find the market equilibrium point  . ​
A) market equilibrium point: 
B) market equilibrium point: 
C) market equilibrium point: 
D) market equilibrium point: 
E) market equilibrium point:

Quizplus · Accepted Answer

First, we can use the two given points (45, 10) and (20, 60) to find the demand function:

Change in price = (60-10)/(20-45) = 2
Demand function: Qd = -2P + 100

Similarly, we can use the two given points (35, 30) and (42, 42) to find the supply function:

Change in price = (42-30)/(42-35) = 2
Supply function: Qs = 2P - 40

To find the equilibrium point, we set Qd = Qs and solve for P:

-2P + 100 = 2P - 40
4P = 140
P = 35

Therefore, the equilibrium price is $35 per cordless phone, and to find the equilibrium quantity, we can plug this value into either the demand or supply function:

Qd = -2(35) + 100 = 30
Qs = 2(35) - 40 = 30

So the equilibrium quantity is 30 cordless phones. Therefore, the market equilibrium point is (30, 35). The closest choice to this answer is C, which is (30, 35).

Retailers Will Buy 45 Cordless Phones from a Wholesaler If