Question
Sub Mart Inc. needs to decide the optimal price to charge and the optimal quantity to supply in the market. The demand function of the
Sub Mart Inc. needs to decide the optimal price to charge and the optimal quantity to supply in the market. The demand function of the product is given as QD=40-2P, while the supply function of the product is given as QS=2P where P is the price, QD is quantity demanded, and QS is quantity supplied. Solve the following demand function is given as: QD=40-2P. Calculate the equilibrium price and quantity. (5Marks)
Q3.Consider the demand for apples. If the prices of a substitute good(bananas) increases and the price of a complement good (apple pie) increases, can you tell for sure what will happen to the demand for apples? Why or why not? Illustrate your answer with a graph.
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