1. Let’s assume two hypothetical supply and demand equations: Qd=40-4p, Qs=-20+6p.

(2)
1 .Determine the equilibrium price and quantity and draw demand and supply curves?

Given: QD=40-4p; QS=-20+6p;

QD=QS Qs=-
Price Qd=40-4P 20+6P
So, 40-4p=-20+6p
4 24 4
40+20=6p+4p 5 20 10
6 16 16
60=10p
7 12 22
P=6 8 8 28
9 4 34
Substitute p=6 in equation.
10 0 40
Eq=40-4(6)
Eq=16
Therefore Ep=6, Eq=16
B. Determine AR, MR, and TR?

dTR TR
Q=40-4p MR¿ ( 10 Q−0.25Q 2) AR¿
dQ Q
Q-40=-4p MR=10-0.5Q AR=(10 Q−0.25 Q2 )/Q
4p=40-Q
P=-1/4+ 40/4 AR=10-0.25Q
P=-0.25Q+10
P=10-0.25Q (inverse demand function)
TR=PxQ
TR= (10-0.25Q) Q
TR=10Q-0.25Q2

C.Determine AC and MC if TC=10Q2+Q+125?

GIVEN: TC =10Q2+Q+125; AC =TC/TQ; MC =ΔTC/ΔTQ

d ( TC ) d
TC=10Q2+Q+125 MC= = ( 10Q2 +Q+125 )
dQ dq
TC
AC= MC=20 Q+1
Q
2
AC=10 Q +Q+125 ÷ Q
AC=(10 Q+1+ 125) /Q
D. Find the profit maximizing P and Q, illustrate the graph?

TR=10Q-0.252 TR= p x Q

TC=10Q2+Q+125 p= (10Q-0.25Q2)/Q

PROFIT MAX: MR=MC P=10-0.25Q (inverse demand function)

10-0.5Q=20Q+1 P=10-0.25(0.44)

10-1=20Q+0.5Q P=10-0.11

9=20.5Q P=9.89

Q=9/20.5

Q=0.44 (output)