Cupcakes Emporium is a distributor of cupcakes. They discovered that if they cha

Question

                                                                    Cupcakes Emporium is a distributor of cupcakes. They discovered that if they charge
                    $5.00 per cupcake, no one is willing to buy a cupcake, but their bakers are willing to produce 12,000
                    cupcakes per day. However, if they charge $1.00 per cupcake, their bakers are unwilling to produce
                    any cupcakes, but their customers are willing to purchase 7,200 cupcakes per day. What is the market
                    price (aka the equilibrium price) and how many cupcakes will be sold per day at that price?

Explanation / Answer

We have two points for each so we can make two lines.
(5, 12000) and (1, 0)

This gets us the line
3000(x-1)=y
x is the price, y is the quantity.

Our other line is (1, 7200), (5, 0)

1800(5-x)=y

set these two equal:

1800(5-x)=3000(x-1)

x=5/2

so price is $2.5

plug that into either equation:

3000(2.5-1)=y

3000*1.5 = 4500 sold

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