Suppose that King Kanuta demands that each of his subjects give him 4 coconuts for every coconut that they consume.The king puts all of the coconuts that he collects in a large pile and burns them.The supply of coconuts is given by S(p_s) = 100p_s, where p_s is the price received by suppliers.The demand for coconuts by the king's subjects is given by D(p_d) = 10,400 - 100p_d, where p_d is the price paid by consumers.In equilibrium, the price received by suppliers will be

A) $20.
B) $52.
C) $30.
D) $260.
E) None of the above.

Question

Mehak Malhotra · Accepted Answer

Final Answer : A, Explanation :  In equilibrium, the quantity supplied equals the quantity demanded. So, we have:100p s  = 10,400 - 100p d Substituting p d  = 4p s , we get:100p s  = 10,400 - 100(4p s )100p s  = 10,400 - 400p s 500p s  = 10,400p s  = 20.8Therefore, the price received by suppliers will be $20.

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