What is the market quantity demanded of DVDs at $12 in figure below? And Total Revenues....

What is the market quantity demanded of DVDs at $12 in figure below? And Total Revenues. Can you tell if this is equilibrium?

Quantity Demanded

Price per DVD	Buyer 1	Buyer 2	Buyer 3	Buyer 4
20	0	0	1	0
18	0	1	3	0
16	1	2	5	1
14	2	4	7	3
12	3	6	9	6
10	4	8	11	10
8	5	11	13	15

Solutions

Expert Solution

Market demand is the sum of quantity demanded by individual buyers. It is the total quantity demanded by all buyers in the market.

From the given information we can see that at a price of $12, quantity demanded by buyer 1 is 3 DVDs, quantity demanded by buyer 2 is 6 DVDs , quantity demanded by buyer 3 is 9 DVDs and quantity demanded by buyer 4 is 6 DVDs. So,

market demand= sum of individual quantity demanded by all the buyers

market demand= quantity demanded by buyer 1+ quantity demanded by buyer 2+ quantity demanded by buyer 3 + quantity demanded by buyer 4

Market demand= 3+6+9+6

Market demand= 24 DVDs

Hence, Market quantity demanded of DVDs at a price of $12 is 24 DVDs.

Total revenue is the revenue earned from the sale of a specific units of a good. At a price of $12, market quantity demanded of DVDs is 24 DVDs. So,

Total revenue= price x quantity

Total revenue= $12 x 24

TOTAL REVENUE= $288

Hence, Total revenue from the sale of 24 DVDs is $288.

NO, we cannot tell this is the EQUILIBRIUM.

Equilibrium refers to a situation in which, at a particular price, quantity demanded by buyers equals quantity supplied by suppliers. Equilibrium clears the market and there is no unsold stock of goods left. Here, as only quantity demanded by buyers is available and information regarding quantity supplied by suppliers is not provided, we cannot determine the Equilibrium.

Rahul Sunny answered 1 year ago

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