Suppose Demand Is Given by Q^d = 400 - 15P

question 3

Multiple Choice

Suppose demand is given by Q^d = 400 - 15P + I, where Q^d is quantity demanded, P is price and I is income. Supply is given by Q^s = 5P, where Q^s is quantity supplied. When I = 200, equilibrium price is

• A) 15
• B) 20
• C) 25
• D) 30

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Definitions:

Expected Cost

An estimate of the cost for a product, project, or operation that is anticipated under normal conditions.

Sell

The act of giving or handing over something in exchange for money.

Contribution Margin

The difference between sales revenue and variable costs, indicating how much revenue contributes to covering fixed costs and generating profit.

Relevant Range

The range of activity within which the assumptions about fixed and variable cost behaviors are valid.