You can sell 90 pet chias per week if they are marked at $1 each, but only 20 ea

Question

You can sell 90 pet chias per week if they are marked at $1 each, but only 20 each week if they are marked at $2/chia. Yo supplier is prepared to sell you 30 chias each week if they are marked at $1/chia, and 110 each week if they are marked at s2 per chia. ur chia (a) Write down the associated linear demand and supply functions demand function qp) supply function q(p)= (b) At what price should the chias be marked so that there is neither a surplus nor a shortage of chias? HINT [See Example 4.] Need Help? Retard ad it

Explanation / Answer

we have two points for demand function

( 1, 90 ) ( 2 , 20 )

slope = (20 - 90 ) / (2-1)

= -70

y - 90 = -70 ( x-1 )

y = -70x + 160

demand equation is q(p) = -70p + 160

finding supply function

( 1, 30 ) ( 2, 110)

slope = (110 - 30 ) / (2-1)

=80

y - 30 = 80 ( x- 1 )

y = 80x - 50

supply function is

q(p) = 80p - 50

b) setting both equations equal to each other

80p - 50 = -70p+ 160

150p= 210

p = 1.4

so, chias should be marked at $ 1.4

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