Question

Suppose the demand function​ (D) for golf clubs​ is: Q​P, where P is the price paid by consumers in dollars per club and Q is the quantity demanded in thousands. Suppose the supply curve​ (S) for golf clubs is estimated to​ be: QP. Calculate the equilibrium price for golf clubs and the equilibrium quantity sold. The equilibrium price is ​$ 75 per club ​(Enter your response as an​ integer.)​, and the equilibrium quantity is 75 thousand clubs ​(Enter your response as an integer.​) Suppose instead that golf club producers agree to charge a price of ​$ per club. This would result in a surplus of nothing thousand clubs ​(Enter your response as an integer.​)

Answer 1

Answer:

(a)

The equilibrium price is $75 per club

The equilibrium quantity is 75000 clubs

(b)

A charge a price of $​50 per club. This would result in a surplus of 25000 clubs

Explanation:

Given

$Q = 150 - 1.00P$ --- The demand function

$Q = 1.00P$ --- The supply function

Solving (a): The equilibrium price and quantity

To do this, we equate both functions

This gives:

$1.00P = 150 - 1.00P$

Collect like terms

$1.00P+1.00P = 150$

$2.00P = 150$

Make P the subject

$P =\frac{150}{2.00}$

$P = \ 75$ ---The equilibrium price

Substitute 75 for P in $Q = 1.00P$

$Q = 1.00 * 75$

$Q = 75$ ---- The equilibrium quantity

Solving (c): When the price is changed to $50

This means that: $P =50$

The quantity demanded will be:

$Q = 150 - 1.00P$

$Q = 150 - 1.00 * 50$

$Q = 150 - 50$

$Q = 100$

Subtract the equilibrium quantity from $Q = 100$  to get the shortage/surplus

$\triangle Q = 100 - 75$

$\triangle Q = 25$

Since the change is positive, then there is a surplus.