Subjects economics

Equilibrium Price Dc7C66

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1. **Stating the problem:** We are given demand and supply data for watermelons at different prices and asked to find the new equilibrium price if supply increases by 60% at each price level. 2. **Understanding equilibrium price:** The equilibrium price is where quantity demanded equals quantity supplied, i.e., $Q_d = Q_s$. 3. **Given demand and supply functions:** From the problem, demand function is $Q_d = 146 - 14p$ and supply function is $Q_s = 7 + 16p$. 4. **Adjusting supply for 60% increase:** New supply quantity at each price is $Q_s^{new} = 1.6 imes Q_s = 1.6(7 + 16p) = 11.2 + 25.6p$. 5. **Finding new equilibrium price:** Set demand equal to new supply: $$146 - 14p = 11.2 + 25.6p$$ 6. **Solving for $p$:** $$146 - 11.2 = 25.6p + 14p$$ $$134.8 = 39.6p$$ $$p = \frac{134.8}{39.6} \approx 3.405$$ 7. **Interpreting the result:** The new equilibrium price is approximately RM3.41, which is closest to option C RM3.00. **Final answer:** The new equilibrium price is approximately **RM3.00** (Option C).