Chapter 4.1, Problem 66E

Supply and demand for baseball caps. Suppose that the supply and demand for printed baseball caps for a particular week are

$\begin{array}{cc}p=0.4q+3.2& \text{Price-supply}\text{equation}\\ p=-1.97q+17& \text{Price-demand}\text{equation}\end{array}$

where $p$ is the price in dollars and $q$ is the quantity in hundreds.

(A) Find the supply and demand (to the nearest unit) if baseball caps are $\text{\$}4$ each. Discuss the stability of the baseball cap market at this price level.

(B) Find the supply and demand (to the nearest unit) if baseball caps are $\text{\$}9$ each. Discuss the stability of the baseball cap market at this price level.

(C) Find the equilibrium price and quantity.

(D) Graph the two equations in the same coordinate system and identify the equilibrium point, supply curve, and demand curve.