Question
In: Advanced Math
One of the luxury car manufacturers usually wants to make a limited number of automobiles in...
One of the luxury car manufacturers usually wants to make a limited number of automobiles in a given year and the company’s aim is to expand their profit margins in each car sold. After doing the analysis on the sales of their cars, the company determined the below supply and demand functions of the cars sold:
Supply function: P = 1000 + Q^2
Demand function: P = 21000 – Q^2
a) Calculate the producer, consumer and total surplus at the market equilibrium.
b) If the manufacturer restricts the number of cars manufactured and sold to 800 at the demand price of $15,000, how much is the total producer surplus?
c) A manufacturer wants to maximize the producer surplus and hence determine the quantity (give the whole number) at which this can be possible. Also determine the producer surplus at this quantity.
Solutions
Colby Messinger answered 1 year agoRelated Solutions
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car dealers before deciding to purchase an as new 1998 Ford Mustang
from American Car Sales. The sales person, Jaxson, tells Belinda
that the car was manufactured in 1998 and had only done 54,000
kms.
Three months later, Belinda has the Mustang serviced with her
local mechanic who was a Mustang enthusiast. He comments on the
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car dealers before deciding to purchase an as new 1998 Ford Mustang
from American Car Sales. The sales person, Jaxson, tells Belinda
that the car was manufactured in 1998 and had only done 54,000 kms.
Three months later, Belinda has the Mustang serviced with her local
mechanic who was a Mustang enthusiast. He comments on the fact that
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