Answer to Question #267883 in Microeconomics for Shana

Question

The following table shows the daily supply and demand for chicken burgers at a sporting event: Price (RM) Quantity demand (units) Quantity supply (units) 4.00 110 420 3.50 160 380 3.00 240 240 2.50 320 160 2.00 410 96 a) What is the equilibrium price of chicken burgers? Discuss your reason. b) If the organizer of this sporting event decide to set the price at RM4.00, how many chicken burgers should be sold? Write your answer. c) One of the burger stall in this sporting event is offering free fries for every 3 chicken burgers purchased but customers. Describe how does this offer may affect customers demand?

Answer 1

Solution:

a.). The equilibrium price of chicken burgers is 3.

This is the price where the quantity demanded and supplied is equal. Both are 240 and hence the market is said to be at equilibrium.

 

b.). If the organizer of this sporting event decides to set the price at RM4.00, the chicken burgers that will be sold are 110 pcs.

This is the quantity demanded at a price of RM4.00.

 

c.). This offer will increase customer demand. This is a price discrimination strategy that is meant to attract customers. More consumers will be attracted by the discount being provided, so the stall selling those burgers will experience high revenue.