170 is not correct. What will be the correct answer? 8 of 33 (8 complete) Score:

Question

170 is not correct. What will be the correct answer?

8 of 33 (8 complete) Score: 1.5 of 2 pts &Concept Question 2.4 Suppose the demand function (D) for golf clubs is where P is the price paid by consumers in dollars per club and Q is the quantity demanded in thousands Suppose the supply curve (S) for golf clubs is estimated to be: HW Score Q 240 0.50P Q-1.00P Calculate the equilibrium price for golf clubs and the equilibrium quantity sold. The equilibrium price is160 per club (Enter your response as an integer.), and the equilibrium quantity is 160 thousand clubs (Enter your response as an integer.) Suppose instead that golf club producers agree to charge a price of $140 per club This would result in a shortage of 170 thousand clubs (Enter your response as an integer.)

Explanation / Answer

Demand function of golf club is , Q = 240-0.50P, where Q is quantity demanded in thousands and p is price in dollars

Supply function of golf club is, Q = 1.00P

At equlibrium, demand and supply will be equal

So equating Demand and supply

So, 1.00P = 240 - 0.50P

1.5P = 240

P = $160

Putting this in supply equation, we get supply, Q = 160 thousand clubs

No in the next part, Producers are charging price of $140

So now put in supply equation, Q = 140 thousand clubs

By putting this in demand equation, Q = 240 - 0.5*140 = 170 thousand golf clubs

So the shortage is quantity demanded - quantity supplied i.e. 170-140 = 30 thousand golf clubs

So shortage is 30.

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