suppose the demand and supply curves for sparkling cider are given by:QD = 110 – 20PQS...

suppose the demand and supply curves for sparkling cider are given by:QD = 110 – 20PQS = -32 + 13Pwhere QD is the quantity of sparkling cider demanded (in thousands of bottles), QS is the quantity supplied, and P is the price of sparkling cider (in dollars per bottle).

a.Find the equilibrium price and quantity of sparkling cider. Round P to the nearest cent (hundredth) and Q to the nearest whole number.

b.If price is set at $4 per bottle, will there be a surplus or a shortage? How large?

c.Suppose the market for sparkling cider is perfectly competitive. If a firm in this market has a marginal cost MC = 0.7 + 0.2q, how many bottles will this firm produce at the market equilibrium price?

Expert Solution

Rahul Sunny answered 9 months ago

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