Question

Worldwide quarterly sales of a brand of cell phones were approximately q = −p + 126 million phones when the wholesale price was $p. (a) If the cellphone company was prepared to supply q = 9p − 354 million phones per quarter at a wholesale price of $p, what would have been the equilibrium price? $ 48 Correct: Your answer is correct. (b) The actual wholesale price was $43 in the fourth quarter of 2004. Estimate the projected shortage or surplus at that price. HINT [See Example 4.] There is an estimated Correct: Your answer is correct. of Incorrect: Your answer is incorrect. million phones.

Answer 1

Answer:

a) equilibrium price = $48

b) shortage of 50 million phones

Step-by-step explanation:

Quarterly sales of a brand/quantity demanded (q) =

-p+126 million phones

a) if supply(q) = 9p - 354 million phones, at equilibrium quantity demanded = quantity supplied

-p + 126 = 9p - 354

-p - 9p = -354 - 126

-10p = -480

p = -480/-10

p = $48

The price at equilibrium = $48

b) actual wholesale price in the fourth quarter of 2004= $43

Quantity demanded = -p + 126

= -43 + 126

= 83 million phones

Quantity supplied = 9p - 354

= 9(43) - 354

= 387 - 354

= 33 million phones

Since quantity supplied is less than quantity demanded, there will be a shortage.

Shortage = 83 -33

= 50 million phones