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The Demand and Supply Equations for the Peach Market Are

question 167

Essay

The demand and supply equations for the peach market are:
Demand: P = 24 - 0.5Q
Supply: P = -6 + 2.5Q
where P = price per bushel,and Q = quantity (in thousands).
a.Calculate the equilibrium price and quantity.
b.Suppose the government guaranteed producers a price of $24 per bushel.What would be the effect on quantity supplied? Provide a numerical value.
c.By how much would the $24 price change the quantity of peaches demanded? Provide
a numerical value.
d.Would there be a shortage or surplus of peaches?
e.What is the size of this shortage or surplus? Provide a numerical value.


Definitions:

Contribution Margin

The amount remaining from sales revenue after all variable expenses have been deducted.

Photo-prints

Photographic images produced on paper or other substrates from digital or film originals.

Industrial Photo-finishing

Refers to the commercial process of developing and printing photographic images on a large scale, typically for businesses.

Contribution Margin Ratio

The percentage of each sales dollar that remains after variable costs are subtracted, indicating how much contributes towards fixed costs and profit.

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