Suppose that, on and near the U.C. Sunnydale campus, the weekly supply curve for lattes is given by the equation Q = max(1000 P - 2000, 0) : nobody makes any lattes unless the price is above $2/latte, and for each $1 the price is above $2 an extra 1000 lattes are made.
Suppose that customers have $10,000/week to spend on lattes. Draw the supply curve and the demand curve.
What is the equilibrium price of lattes? What is the equilibrium quantity of lattes?
Published on March 13, 2014 18:38