Finding equilibrium price and quantity

Posted by Asd1995 on Jun 11, 2017; 3:26pm
URL: http://discussion-forum.276.s1.nabble.com/Finding-equilibrium-price-and-quantity-tp7605383.html

 Roses, once in full bloom, have to be picked up and sold on the same day. On any day the market demand function for roses is given by            P  =  α - Q         (Q is number of roses ; P is  price of a rose). It is also given that the cost of growing roses, having been incurred by any owner of a rose garden long ago, is not a choice variable for him now.

( a ) Suppose, there is only one seller in the market and he finds 1000 roses in full bloom on a day. How many roses should he sell on that day and at what price?

( b ) Suppose there are 10 sellers in the market, and  each finds in his garden 100 roses in full bloom ready for sale on a day. What will be the equilibrium price and the number of roses sold on that day? (To answer this part assume α ≥ 1100).

( c )  Now suppose, the market is served by a large number of price taking sellers. However, the total availability on a day remains unchanged at 1000 roses. Find the competitive price and the total number of roses sold on that day.