1. The following relations describe the supply and demand for posters:

QD = 65,000 - 10,000P

QS = 35,000 + 15,000P

Where Q is the quantity and P is the price of a poster, in dollars.

a. Complete the following table:

Price QS QD Surplus or Shortage

$6.00

5.00

4.00

3.00

2.00

1.00

b. What is the equilibrium price?

2. The ABC Marketing Consulting Firm found that a particular brand of portable stereo has the following demand curve for a certain region:

Q = 10,000 - 200P + 0.03N + 0,6I + 0.2A

Where Q is the quantity per month, P is price ($), N is population, I is disposable income per household ($), and A is advertising expenditure ($).

a. Determine the demand curve for the company in a market in which P = 300, N = 1,000,000, I = 30,000 and A = 15,000

b. Calculate the quantity demanded at prices of $200, $175, $150, and $125.

c. Calculate the price necessary to sell 45,000 units.

3. Given the following total revenue function:

TR = 9Q - Q2

a. Derive the total revenue, average revenue, and marginal revenue schedules from Q = 0 to Q = 6 by 1's.

b. On the same set of axes, plot the total revenue, the average revenue, and the marginal revenue schedules of part (a).

c. With reference to your figure in part (b), explain the relationship among the total, average, and marginal revenue curves.

4. Given the following total cost schedule:

Q

0

1

2

3

4

TC

1

12

14

15

20

a. Derive the average and marginal cost schedules.

b. On the same set of axes, plot the total, average, and marginal cost schedules of part (a).

c. With reference to your figure in part (b), explain the relationship among the total, average, and marginal cost curves in part (b).

5. With the total revenue curve of Problem 3 and the total cost curve of Problem 4, derive the total profit function and show how the firm determines the profit maximizing level of output.