# Question

Consider the following demand schedule for bottles of water:

PRICE (P) Quantity Demanded by Consumers

(bottles / month)

$0.50 ................1,100

1.00...............1,050

1.50...............1,000

2.00...............950

2.50...............900

3.00...............850

3.50...............800

4.00...............750

4.50...............700

5.00...............650

The equations representing demand, inverse demand, supply and inverse supply are as follows:

Demand: Qd = - 100P + 1,150

Inverse Demand: P = - 0.01 Qd + 11.5

Supply: Qs = 400 P - 100

Inverse Supply: P = 0.0025 Qs + .25

Using this information, determine the equilibrium price and quantity for bottled water in this market. Explain what will happen in the market if price equals $4.00. What will happen if price equals $2.00?

PRICE (P) Quantity Demanded by Consumers

(bottles / month)

$0.50 ................1,100

1.00...............1,050

1.50...............1,000

2.00...............950

2.50...............900

3.00...............850

3.50...............800

4.00...............750

4.50...............700

5.00...............650

The equations representing demand, inverse demand, supply and inverse supply are as follows:

Demand: Qd = - 100P + 1,150

Inverse Demand: P = - 0.01 Qd + 11.5

Supply: Qs = 400 P - 100

Inverse Supply: P = 0.0025 Qs + .25

Using this information, determine the equilibrium price and quantity for bottled water in this market. Explain what will happen in the market if price equals $4.00. What will happen if price equals $2.00?

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