103 531
Assignments Done
98.4%
Successfully Done
In November 2021

Question #111625
General Electric is an mp3 playersâ€™ producer. Demand and supply functions of mp3 players are as
follows:
QD= 1,450 - 25P (Demand)
QS= -100 + 75P (Supply)
Where P is the price of mp3 players.
1. Calculate the market equilibrium price/output combination.
2. What will happen in the market if the price of mp3 players increased to $40? 3. How will the market adjust? 4. What will happen in the market if the price of mp3 players increased to$10?
5. How will the market adjust?
1
2020-04-23T11:51:18-0400

1.To find equilibrium price and quantity we need to solve this equation:

"1450-25P=-100+75P"

"100P=1550"

"P'=15.5"

"Q'=1450-25\\times15.5"

"Q'=1062.5"

So, P=15.5 and Q=1062.5.

2.When the price is $40 the quantity demanded is 450, but the quantity supplied is 2900. So suplly exceedes suply. 3.In such circumstances the amount actually sold on the market will be 450. In long-run the suply curve will shift to the left and new equilibrium(with higher price and higher quantity) will be established. 4.When the price is$10, the quantity demanded is 1200, but the quantity suplied is 250.

5.The quantity which will be sold on the market will be 250. In long-run the suply curve will shift to the right and new equilibrium(with lower price and higher quantity) will be established.

Need a fast expert's response?

Submit order

and get a quick answer at the best price

for any assignment or question with DETAILED EXPLANATIONS!