Pricing and Output Decisions: Supply and Demand
Not what you're looking for?
The Chilean Fruit Growers Association estimates the following market supply and demand curves for fruit:
QS = 125,000P
QD = 200,000 - 50,000P
Where Q is the daily output in pounds and P is the price per pound.
a) Determine the price and quantity that would result under competitive conditions.
b) The Chilean Fruit Growers are trying to organize a cartel among growers in their region. Assuming that all growers participate in the cartel, what price and quantity should the cartel set?
c) The Growers Association would like to give growers and idea of the benefits available from the cartel. How significant are the advantages from the cartel?
Purchase this Solution
Solution Summary
Solution depicts the steps to determine equilibrium price and quantity in the given case.
Solution Preview
a) Determine the price and quantity that would result under competitive conditions.
QS=125000P
QD=200000-50000P
Put QS=QD for equilibrium
125000P=200000-50000P
175000P=200000
P=200000/175000=$1.14285714
QS=125000*1.14285714=142857.14
QD=200000-50000*1.14285714=142857.14
Equilibrium price=$1.14
Equilibrium quantity=142857 pound
b) The Chilean Fruit Growers are trying to organize a cartel among growers in their region. Assuming that all growers participate in the cartel, what price and quantity ...
Education
- BEng (Hons) , Birla Institute of Technology and Science, India
- MSc (Hons) , Birla Institute of Technology and Science, India
Recent Feedback
- "Thank you"
- "Really great step by step solution"
- "I had tried another service before Brain Mass and they pale in comparison. This was perfect."
- "Thanks Again! This is totally a great service!"
- "Thank you so much for your help!"
Purchase this Solution
Free BrainMass Quizzes
Economic Issues and Concepts
This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.
Economics, Basic Concepts, Demand-Supply-Equilibrium
The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.
Basics of Economics
Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.
Elementary Microeconomics
This quiz reviews the basic concept of supply and demand analysis.
Pricing Strategies
Discussion about various pricing techniques of profit-seeking firms.