Question

In: Economics

Suppose that the market demand is given by Q(p)=200-5p. Let p(q) be the maximal price at...

Suppose that the market demand is given by Q(p)=200-5p. Let p(q) be the maximal price at which the agents would buy q units, i.e., the inverse demand function. Then?

a. p(q)=40-5q

b. p(q)=40-0.2q

c. p(q)=40-0.4q

d. p(q)=200-10q

e. p(q)=200-5q

Solutions

Expert Solution

The demand function is given as:

Q(p) = 200 - 5p

The inverse demand function represents the price as a function of quantity demanded. It is the inverse of the demand function. So,

Q(p) = 200 - 5p (given)

5p = 200 - Q(p)

P(q) = 40 - 0.2q

So, the inverse demand function is P(q) = 40 - 0.2q. Therefore, the correct answer is 'Option B'.

Rahul Sunny answered 2 years ago
Next > < Previous

Related Solutions

Let market demand be given by Q(P) = 200 ? P. Each firm’s cost function is...
Let market demand be given by Q(P) = 200 ? P. Each firm’s cost function is C(qi ) = 20qi , where i = 1, 2. (a) Using the Cournot model, find each firm’s output, profit, and price. (b) Graph each firm’s reaction function. Show the Cournot equilibrium. (c) Suppose that the duopolists collude. Find their joint profit-maximizing price, output, and profit; find each firm’s output and profit. (d) Does each firm have an incentive to increase output? What is...
Suppose the market demand for broccoli is given by Demand: Q = 1000 – 5P Where...
Suppose the market demand for broccoli is given by Demand: Q = 1000 – 5P Where Q is quantity measured in 100s of bushels and P is price per hundred bushels. The market supply is given by Supply: Q = 4P – 80 What is the equilibrium price and quantity? How much is spent on broccoli? What is consumer and producer surplus? Describe the impact of a $150 per hundred bushel price floor on broccoli. (How many bushels would be...
Suppose the inverse demand function is given by ?=5?−5p=5q−5 where p is the market price and...
Suppose the inverse demand function is given by ?=5?−5p=5q−5 where p is the market price and q is the quantity demanded. Calculate price elasticity of demand. Round your answer to the first decimal place. There is no value for p. This is all the information the question gives.
In market 1, let demand be given by q1 = A−5p. In market 2, let demand...
In market 1, let demand be given by q1 = A−5p. In market 2, let demand be given by q2 = 500−10p. Let Q = q1 + q2. Let total costs be C(Q) = 20 + 2Q. Let A < 250. If a monopolist is forced to charge the same price in both markets what price will that be? What is the price in each market if the monopolist can charge different prices in each market? As a consumer in...
Let the market demand curve be QD=20-5P and the market supply curve be QS=5P-10. Let price...
Let the market demand curve be QD=20-5P and the market supply curve be QS=5P-10. Let price P be measured in $/unit and let quantity Q be measured in singular units (i.e. simple count). Solve for the inverse demand curve. Solve for the inverse supply curve. As best you can, graph the demand and supply curves, marked D and S, respectively. Mark the vertical and horizontal intercepts with the appropriate numerical values Solve for the equilibrium price P* and quantity Q*,...
Let the market demand for carbonated water be given by QD = 100 − 5P. Let...
Let the market demand for carbonated water be given by QD = 100 − 5P. Let there be two firms producing carbonated water, each with a constant marginal cost of 2. a)What is the market equilibrium price and quantity when each firm behaves as a Cournot duopolist choosing quantities? What profit does each firm earn? b)Sketch the Cournot response functions for firm 1 and firm 2. c)What is the market equilibrium price and quantity when each firm behaves as a...
Suppose the demand equation facing a firm is Q = 1000 – 5P, MR = 200...
Suppose the demand equation facing a firm is Q = 1000 – 5P, MR = 200 – 0.4 Q, and MC = $20. Compute the maximum profit the firm can earn. Suppose the firm is considering a quantity discount. It offers the first 400 units at a price of $120, and further units at a price of $80. How many units will the consumer buy in total? Compute the profit if the quantity discount is implemented. If the firm implemented...
Suppose the demand equation facing a firm is Q = 1000 – 5P, MR = 200...
Suppose the demand equation facing a firm is Q = 1000 – 5P, MR = 200 – 0.4 Q, and MC = $20. Compute the maximum profit the firm can earn. Suppose the firm is considering a quantity discount. It offers the first 400 units at a price of $120, and further units at a price of $80. How many units will the consumer buy in total? Compute the profit if the quantity discount is implemented. If the firm implemented...
Market demand is given by Q = 53 - P. Let AC = MC = 5....
Market demand is given by Q = 53 - P. Let AC = MC = 5. There are two firms; A, B. So qA + qB = Q. a. Find the reaction functions for firm A and firm B. b. Find the Cournot equilibrium firm output, market output, and price. c. Graph the demand curve and the MC curve. d. Find the monopoly equilibrium output and price (you already did this in the Monopoly Assignment). e. Find the competitive market...
Suppose a monopolist faces the following demand curve: Q = 200 – 5P Also, the long...
Suppose a monopolist faces the following demand curve: Q = 200 – 5P Also, the long run total cost of the monopolist is given by TC = 20 + 2Q - .5Q2 a. What the monopolist’s MC function? (1/2 Point)                          b. What is the monopolist’s MR function? (1/2 Point) c. What is the monopolist’s profit maximizing level of output? (1/2 Point) d. What is monopolist’s profit maximizing level of price? (1/2 Point) e. How much profit is this monopoly...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT