Question

I) From one of his market researches, the marketing manager of one of the mobile phone companies in Uganda estimated the demand and supply functions for mobile phones as follows: Qd=140,000-1 00P and Qs=80,000+50P respectively. Required:

a) Determine the market equilibrium price and quantity of the mobile phones and also comp ute for the total company's revenue at the market equilibrium situation.

b) If the government sets a fixed price for phones at P=$200, what nature and amount of market imbalance is created in the market, hence state the price policy the government h as applied. ​

Answer 1

The market equilibrium price is $400 and the equilibrium quantity is 100,000 units, resulting in a total company's revenue of $40,000,000. If the government sets a price ceiling at $200, it creates a shortage of 30,000 units in the market.

Step-by-step explanation:

To determine the market equilibrium price and quantity for mobile phones, we set the demand function (Qd) equal to the supply function (Qs):

140,000 - 100P = 80,000 + 50P

Solving for P (price), we get 60,000 = 150P, which means P = 400. Therefore, the equilibrium price is $400. Substituting P in the demand or supply function, we find the equilibrium quantity is 100,000.

The total company's revenue at the equilibrium situation is found by multiplying the equilibrium price and quantity: $400 * 100,000 = $40,000,000.

If the government sets a fixed price at $200, we determine the new quantity demanded and supplied:

Qd = 140,000 - 100*200 = 120,000

Qs = 80,000 + 50*200 = 90,000

Therefore, a shortage of 30,000 units is created (Qd > Qs). This price policy is known as a price ceiling.

Answer 2

200 is the ancerw $200

Step-by-step explanation:

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