Consider an example of the vehicle tires; if the supply and demand are:
Qs = – 500 8p ; Qd = 500 –2 p
Solve:
a)Equilibrium price and equilibrium quantity and calculate total revenue?
b)If there were a price celling equal to 120 SAR per each tire imposed, calculate the price elasticity of demand? Does this consider elastic, inelastic or unit elastic? Also, calculate the total revenue?
c)Now consider the vehicle battery; if the supply and demand is:
i.Qs = – 100 3p ; Qd = 1100 – 9p, calculate the equilibrium price and equilibrium quantity. Also, calculate Total Revenue.ii.If there were a price celling of 120 SAR imposed per each pair of battery, calculate the price elasticity of demand? Do the battery prodduct consider elastic, inelastic or inelastic or unit elastic? Also calculate total revenue.
d)Compare the total revenue for the tires and the total revenue you found for the battery. Which one of product’s total revenue has been increased after the price have been increase and why? Explain in words and show the difference in numbers as well.
e)Recall part a (The tires) Calculate the CS