Question

a retail chain will buy 900 cordless phones if the price is $40 each and 700 if the price is $50. a wholesaler will supply 550 phones at $30 each and 1950 at $70 each. assuming that the supply and demand functions are linear, find the market equilibrium point and explain what it means. market equilibrium occurs when the number of units is 900 and the price is $40 per unit. what is the correct interpretation of the above answer? a. when the price is $40, the number of cordless phones demanded is not equal to the number of cordless phones supplied. b. when the price is $40, the number of cordless phones demanded equals the number of cordless phones supplied. c. when the price is $80, the number of cordless phones demanded equals the number of cordless phones supplied, which equals 900. d. when the price is $80, the number of cordless phones demanded equals the number of cordless phones supplied, which equals 1250.

Explanation:

Market equilibrium is the point where quantity demanded equals quantity supplied. Here, at a price of $40, the quantity of cordless - phones demanded is 900. If this is the equilibrium point, then at this price, the quantity supplied must also be 900.

Answer:

B. When the price is $40, the number of cordless phones demanded equals the number of cordless phones supplied