Question

1. Suppose an airline announces that its earnings this year are lower than expected due to reduced
ticket sales. The airline spokesperson gives no information on how the company plans to turn
things around, he only mentioned that the current demand curve is given by ?
2 −
1
3
? − 4? = 0
and the supply curve is given by 2? + 8? − 4?
3 = 2?
2
a. Find the equilibrium points of the airline
b. Find the Choke price
c. Current owners of the airline’s stock and potential buyers of the stock would adjust their
estimates of what the value of the corporation’s stock should be. As a result, the supply curve
for the stock would increase by k for each price, (note: k is the last 3 digit from your mobile
number). The demand curve for the stock would totally change to be represent by this
equation −
3?+32
16
− ? + 50 = 0, find the following
i. New supplied curve
ii. Slope of demand curve

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Answer 1