Worldwide quarterly sales of a brand of cell phones were app

Worldwide quarterly sales of a brand of cell phones were approximately q = -p + 146 million phones when the wholesale price was $p. If the cellphone company was prepared to supply q = 4p - 354 million phones per quarter at a wholesale price of $p, what would have been the equilibrium price? The actual wholesale price was $95 in the fourth quarter of 2004. Estimate the projected shortage or surplus at that price. There is an estimated shortage

Solution

a) For equlibrium price we need to equate -p+146 equals to 4p-354

Therefore we have ,

-p+146 = 4p-354

=> -p - 4p = -354 -146

=> - 5p = - 500

=> p = -500/-5

=> p = $ 100

So equilibrium price = $100

b)

worldwide sale q = -95 +146 = 51

supply = 4*95 -354 = 26

So projected shortage=51-26=25 million phones