Suppose that the inverse market demand for silicone replacement tips for Sony EX71 earbud headphones is p = pN - 0.1Q, where p is the price per pair of replacement tips, pN is the price of a new pair of headphones, and Q is the number of tips per week. Suppose that the inverse supply function of the replacement tips is p = 2 + 0.012Q.
a. Find the effect of a change in the price of a new pair of headphones on the equilibrium price of replacement tips at the equilibrium, dp/dpN.
b. If pN = $30, what are the equilibrium p and Q? What is the consumer surplus? What is the producer surplus?