Robinson\'s demand for pineapples is given as Q = 40 - 4P while Friday\'s is Q =

Question

Robinson's demand for pineapples is given as Q = 40 - 4P while Friday's is Q = 20 - P. Supply is given as Qs = 6 + P, and Pc = $1.

Find equilibrium price, equilibrium quantity, and the amounts Robinson and Friday will both end up consuming.

Then- suppose Rob and Fri are actually dealing with a public good like fireworks (# of rockets) and they must consume the same quantity. Effeciency requires Robinson's willingness to pay + Friday's willingness to pay must = MRT. What is the new effecient Q, and what will Rob and Fri now each be willing to pay?

Explanation / Answer

Given:

Rob demand for Pineapple is Qr=40-4p and

Fridayis Qf=20-p

supply is Qs= 6+p; Pc=1$

At equlibrium price Q=Qs, here Q=Qr+Qf hence

Qr+Qf=Qs:: 40-4p+20-p=6+p

6p=60-6=54

Therefore P= 54/6 = 9

Equalibrium price = 9

The amount

Rob would be demanding= 40-4P= 40-4*9= 40-36=4

Friday would demanding =20-P= 20-9= 11

Quantity deamanded = 11+4= 15

Quantity Supply= Qs= 6+p= 6+9=15

Therefore equalibrium

Price= 9

Quantity=15

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