Question

Consider the following demand^d formula: Q^d = 140 - 3P, and supply^s formula: Q^s = 20 + 20P for lunch at the Mountain View Golf and Country Club.

a) Draw the demand and supply curves.
b) Calculate the equilibrium price and quantity for lunch at the Mountain View Golf and Country Club.
c) Discuss the implications of the calculated equilibrium for the club's lunch pricing and availability.

Answer 1

a) The demand and supply curves is shown below

b) Equilibrium price and quantity

The equilibrium price is the price where the quantity demanded by golfers equals the quantity supplied by the club's kitchen. In this case, the equilibrium price is $5.22 per lunch. At this price, golfers are willing to purchase 124.35 lunches, and the kitchen is willing to prepare and sell that same quantity.

c) Implications for pricing and availability

The calculated equilibrium suggests that the club should charge around $5.22 per lunch. At this price, they can expect to sell around 124.35 lunches. This information can be valuable for the club when making decisions about lunch pricing and staffing levels.