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A2 Problem Solving Assignment

The document contains two problems related to demand curves. Problem 1 provides a demand curve for caps and asks to calculate sales at different prices. Problem 2 provides a demand curve for tablets based on price, population, income, and advertising. It asks to determine the demand curve for a specific market and calculate sales at different prices and the price needed to sell 45,000 units.

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MOIN UDDIN AHMED
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328 views

A2 Problem Solving Assignment

The document contains two problems related to demand curves. Problem 1 provides a demand curve for caps and asks to calculate sales at different prices. Problem 2 provides a demand curve for tablets based on price, population, income, and advertising. It asks to determine the demand curve for a specific market and calculate sales at different prices and the price needed to sell 45,000 units.

Uploaded by

MOIN UDDIN AHMED
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Student Name: Moin Uddin Ahmed ID: 11925

A2 - Problem Applications

Problems

1. The following function describes the demand condition for a company that makes caps
featuring names of college and professional teams in a variety of sports.

Q = 2,000 - 100P

Where Q is cap sales and P is price.

a. How many caps could be sold at $12 each?

b. What should the price be in order for the company to sell 1,000 caps?

c. At what price would cap sales equal zero?

a. Q =2000-100(12)
Q=2000-1200
Q=800
800 caps could be sold at 12$ each

b. Q=2000-100P
1000=2000-100p
100p=2000-1000
100p=1000
P=10
1000 caps could be sold at 10$ each

c. 0=2000-100p
100p=2000
P=20
Caps sale would be zero at 20$ each

2. The ABC marketing consulting firm found that a particular brand of tablet PCs has the
following demand curve for a certain region:

Q = 10,000 - 200P + 0.03Pop + 0.6I + 0.2A

Where Q is the quantity per month, P is price ($), Pop is population, I is disposable income
Per household (S), and A is advertising expenditure ($).

a. Determine the demand curve for the company in a market in which P = 300,
Pop = 1,000,000, I = 30,000, and A = 15,000.

Instructor: Asif Z. Warsi Page 1


Student Name: Moin Uddin Ahmed ID: 11925

b. Calculate the quantity demanded at prices of $200, $175, $150, and $125.

c. Calculate the price necessary to sell 45,000 units.

Answer:

a. Demand curve for the company is calculated as follows:


Q = 10,000 – (200 X 300) + (0.03 X 1,000,000) + (0.6 X 30,000) + (0.2 X 15,000)
Q = 10,000 – 60,000 + 30,000 + 18,000 + 3,000.
Therefore, Q = 1,000 If P = 0
Then Q = 10,000 – (200 X 0) + (0.03 X 1,000,000) + (0.6 X 30,000) + (0.2 X 15,000).
Q = 10,000 + 30,000 + 18,000 + 3,000 = 61,000
If Q = 0
Then 200p = 10,000 + 30,000 + 18,000 + 3,000.
P = 61,000/200.
P = 305.

b. The quantity demanded at prices of $200, $175, $150, and $125 are:

200
Q = 10,000 – (200 X 200) + (0.03 X 1,000,000) + (0.6 X 30,000) + (0.2 X 15,000)= 10,000 –
40,000 +30,000 + 18,000 + 3,000= Q=21,000

175
Q = 10,000 – (200 X 175) + (0.03 X 1,000,000) + (0.6 X 30,000) + (0.2 X 15,000)= 10,000 –
35,000 + 30,000 + 18,000 + 3,000= Q=26,000

150
Q = 10,000 – (200 X 150) + (0.03 X 1,000,000) + (0.6 X 30,000) + (0.2 X 15,000)= 10,000 –
30,000 + 30,000 +18,000 +3,000= Q=31,000

125
Q = 10,000 – (200 X 125) + (0.03 X 1,000,000) + (0.6 X 30,000) + (0.2 X 15,000)=10,000 –
25,000 + 30,000 + 18,000 + 3,000= Q=36,000

c. Price necessary to sell 45,000 units is: 3.

Instructor: Asif Z. Warsi Page 2

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