Answer:
equation for demand is Q=26,906,880,000,150 - 1,706,666,666.7P
equation for supply is Q=9,609,600,000,150.2 + 2,133,333,333.3P
Pls find all other required parameters in the explanation
Explanation:
Let the demand curve be of the general form Q = a - bP
Let the supply curve be of the general form Q = c + dP
where a, b, c, and d are the constants that you have to find from the information given in the equation
To begin, recall the formula for the price elasticity of demand
E = (P/Q)(ΔQ/ΔP)
Where P is the price per pack = $4,504.50
Q is the quantity of packets= 19,219.2 billion
You are given information about the value of the elasticity E as -0.4
So solve for the slope, which is b in the above formula for the demand curve using the equation E = (P/Q)(ΔQ/ΔP
−0.4 = ($4,504.50/19,219200000000)(ΔQ/ΔP)
ΔQ/ΔP = −0.4(19,219200000000/$4,504.50)
= −1,706,666,666.7= −b.
To find the constant a, substitute for Q, P, and b into the demand curve formula
Q = a - bP
so
19,219200000000 = a - 1,706,666,666.7 × 4,504.50
19,219200000000 = a - 7,687,680,000,150.1
a = 19,219200000000 + 7,687,680,000,150.1
a = 26,906,880,000,150
The equation for demand is therefore
Q=26,906,880,000,150 - 1,706,666,666.7P.
To find the supply curve,
recall the formula for the elasticity of supply and follow the same method as above: E = 0.5
E= (P/Q)(ΔQ/ΔP)
0.5 = ($4,504.50/19,219200000000)(ΔQ/ΔP)
ΔQ/ΔP = 0.5(19,219200000000/$4,504.50)
= 2,133,333,333.3 = d.
To find the constant c, substitute for Q, P, and d into the supply curve formula
Q = c + dP so that
19,219200000000 = c + 2,133,333,333.3 × 4,504.50
19,219200000000 = c + 9,609,599,999,849.8
c = 9,609,600,000,150.2
The equation for supply is therefore Q=9,609,600,000,150.2 + 2,133,333,333.3P.
