Answer to Question #267887 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

a.

At equilibrium, Quantity supplied is equal to quantity demanded.

Therefore equilibrium price is 3.00

b.

120 burgers should be sold because that is the amount of burgers demanded.

c.

The offer increases the demand for burgers as customers wish to get free fries therefore even those customers who were not willing to buy may collaborate and acquire the three burgers so as to gain free fries.