The ofllowing equations represent the demand and supply func

The ofllowing equations represent the demand and supply functions associated with a given passenger railway route ofr a particular season: Demand function: V =400 - 12P Supply function: P = 1.5 - 0.03V + 0.006V^2 where V is the daily passenger trips along the route and P is the fare in dollars. Determine the equilibrium demand and price. What is the maximum demand along the route? What is the minimum ticket price? Repeat part a) with a Supply function P = 1.5 - 0.03V - 0.006V^2

Solution

To find equilibrium demand and quantity set demand equation equal to the supply

400-1.5= 12p-0.03v+0.112v

398.5=12p+0.09v

Price= 333

Quantity= 66

B) Demand = 400

Maximum demand along the route will be = 400x12= 480

C)Minimum Ticket price

P= V-400/12

=334/12= 36

D)

P=1.5-.03V+.006V^2

1.5-.03x66x.012x66

= 326