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Nina [5.8K]
3 years ago
7

The current equilibrium price and quantity in the market for walnuts are $5 per pound with 10,000 pounds supplied. Supermarkets

are expecting to see sales rise to 15,000 pounds due to an unusually large crop of walnuts. If the price elasticity of demand is 1.8, what is the new price per pound of walnuts?
a. P = $5
b. P = $6
c. P = $4
d. P = $7
Business
1 answer:
mel-nik [20]3 years ago
6 0

Answer:

Option (a) is correct.

Explanation:

Given that,

Initial Quantity supplied = 10,000

New quantity supplied = 15,000

Initial price = $5

Price elasticity of demand = 1.8

Percentage change in quantity supplied:

= [(New quantity supplied - Initial Quantity supplied) ÷ Initial Quantity supplied] × 100

= [(15,000 - 10,000) ÷ 10,000] × 100

= (5,000 ÷ 10,000) × 100

= 50%

Let the new price be x,

Percentage change in price:

= [(New price - Initial price) ÷ Initial price] × 100

= [(x - $5) ÷ $5] × 100

= (x - 5) × 20

= 20x - 100

Therefore,

Price elasticity of demand = Percentage change in quantity supplied ÷ Percentage change in price

1.8 = 50 ÷ (20x - 100)

1.8 (20x - 100) = 50

36x - 180 = 50

36x = 230

x = 5

Hence, the new price per pound of walnuts is $5.

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Answer:

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It should be noted that when the marginal cost if a firm is more than the marginal revenue, it means that the firm is producing too much.

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2 years ago
The town of Draper, with a population of 20,000, sits adjacent to State University, which has an enrollment of 27,000 students.
madam [21]

Answer: See explanation

Explanation:

a. Let the break even sales be represented by x.

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= 250000/365 days

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