Last week, Wally's Burgers, Inc. reduced the average price on the ½-pound Papa burger by 1%.In response, sales jumped by 2%.
A.) Calculated the point price elasticity of demand for Papa burgers.
B.) Calculate the optimal price for Papa burgers if marginal cost is $1 per unit.
The following relations describe demand and supply conditions in the lumber/forest products industry:
Qd= 75,000-10,000P (Demand)
Qd=-15,000+50,000P (Supply)
Where Q is quantity measured in thousands of board feet (one square foot lumber, one inch thick) and P is price in dollars.
A. Complete the following table:
|
Price
(1)
|
Quantity
Supplied
(2)
|
Quantity
Demanded
(3)
|
Surplus (+) or
Shortage (-)
(4)=(2)-(3)
|
|
$ 3.00
|
|
|
|
|
2.50
|
|
|
|
|
2.00
|
|
|
|
|
1.50
|
|
|
|
|
1.00
|
|
|
|
B.)What is the price and quantity in equilibrium?