Question

The daily demand for hotel rooms on Manhattan Island in New York is given by the equation QD = 250,000 - 375P. The daily supply of hotel rooms on Manhattan Island is given by the equation QS = 15,000 + 212.5P (Use 100$ as the beginning and 600$ as the last price). a. Calculate and provide the demand and supply schedule. (15pts.) b. What is the equilibrium quantity and equilibrium price? (5pts.)

Answer 1

Demand and supply schedule is as follows:

Price	Demand	Supply
100	250000 - 375*100 = 212500	15000 + 212.5*100 = 36250
200	250000 - 375*200 = 175000	15000 + 212.5*200 = 57500
300	250000 - 375*300 = 137500	15000 + 212.5*300 = 78750
400	250000 - 375*400 = 100000	15000 + 212.5*400 = 100000
500	250000 - 375*500 = 62500	15000 + 212.5*500 = 121250
600	250000 - 375*600 = 25000	15000 + 212.5*600 = 142500

(b) From the demand and supply schedule, it is clear that demand is equal to supply when P = 400 and Q = 100000. Thus, this is the equilibrium point,