Chapter 1.2, Problem 27E

Business and Economics

Supply and Demand Suppose that the demand and price for a certain model of a youth wristwatch are related by

p = D(q) = 16 - 1.25q,

where p is the price (in dollars) and q is the quantity demanded (in hundreds). Find the price at each level of demand.

(a) 0 watches (b) 400 watches (c) 800 watches

Find the quantity demanded for the watch at each price.

(d) $8 (e) $10

(f) $12 (g) Graph p = 16 - 1.25q.

Suppose the price and supply of the watch are related by

p = S(q) = 0.75q,

where p is the price (in dollars) and q is the quantity supplied (in hundreds) of watches. Find the quantity supplied at each price.

(h) $0 (i) $10 (j) $20

(k) Graph p = 0.75q on the same axis used for part (g).

(l) Find the equilibrium quantity and the equilibrium price.