Question

A store’s supply/demand graph for MP3 players is shown above. If the price is at the equilibrium point, how much money will the store make by selling MP3 players?

a.
$1,275
b.
$1,600
c.
$3,150
d.
$3,300

Answer 1

Answer: Option 'D' is correct.

Explanation:

Since we have given that

There is supply and demand graph for MP3 players.

If the price is at the equilibrium point, then at that point of intersecting , we can get our equilibrium quantity too.

There is equilibrium price at $ 55. and from the intersecting point, we get our equilibrium quantity i.e. 60 units.

So, Total cost that the store maker will make by selling MP3 players is given by

`Revenue=Price* Quantity\\\\Revenue=55* 60\\\\Revenue=\$3300`

Hence, Option 'D' is correct.

Answer 2

ANSWER

The store will make $

`3,300`

EXPLANATION

If the price is at equilibrium point, the quantity of MP3 players supplied is equal to the quantity of of MP3 demanded.

This is the intersection of the demand and supply curve in the graph above.

At this point,

`60`MP3s were sold at the unit price of $

`55`

Therefore the money that the store makes is equal to the product of the equilibrium price and the quantity supplied.

`= 55 * 60 = 3300`

The correct answer is D.