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Since demand in the Consumer Products market is characterized by a sharp

Since demand in the “Consumer Products” market is characterized by a sharp “knee” around $400, assume the demand equation for an “I-widget” is:

q = 2M-2.5Kp for p<400

q= 4M-5Kp forp>400,                                               Where q = annual sales (quantity) & p = price

If the supply equation is: q = 3.2 x p2,

(1) - What is the market’s equilibrium quantity & price?

(2) - If I-Widget, Inc. requires a 35% markup over unit cost to coveroverhead, profit, taxes, etc., what must their unit cost be inorder to operate at market equilibrium?
 

Apr 16 2018 Read more Less More

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