The demand function for goods has the form Ol = -5p + 25. The sentence function is Qs = 9p-3. Find manufacturers’ revenue in a market equilibrium.
The condition for market equilibrium is the equality of supply and demand, that is:
Qd = Qs.
Let us equate the supply and demand functions, calculate the equilibrium price:
-5P + 25 = 9P – 3,
– 14P = – 28,
P = 2.
Substitute the value of the equilibrium price, define the equilibrium volume of sales:
-5 * 2 + 25 = 9 * 2 – 3,
15 = 15.
Let’s find the producers’ revenue under the given conditions:
W = P * Q = 2 * 15 = 30.
Answer: the revenue of producers in a market equilibrium will amount to 30 units.
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