3. Assume that the quarterly supply & demand functions for DVD players are: Qd= 340-6p and Qs=100+2p
(a) What is the equilibrium price for DVD players
(b) If a price ceiling (legal maximum price) of $28.50 was established would this lead to a shortage, surplus, or no change? What would that shortage/surplus be?
4. On the Burbank to Oakland route, Southwest initially sets price at $86.50 and 246,555 passengers travel per year. Price is lowered to $44.69 during the next year and passenger flights increase to 1,053,139.
(a) What is the point price elasticity of demand on this route at the initial price?
(b) Is this elastic or inelastic demand
(c) What does this result mean for total revenue?
5. A firm faces the following demand and total cost functions: P=100-10q & TC= 10+2q+4q^2
(a) How much output does the firm produce?
(b) What price does the firm charge?
(c) What are the firm's profits (losses)?
6. You have estimated the following total cost function: TC=4Q^2+16
(a) What is the average total cost function?
(b) What is the average variable cost function?
(c) What is the average fixed cost function?
(d) What is the marginal cost function?
(e) What output level will yield the minimum average total cost?
(f) What output level will yield the minimum average variable cost?