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

Quizplus · Accepted Answer

In equilibrium, the quantity supplied equals the quantity demanded. So, we have:100p_s = 10,400 - 100p_dSubstituting p_d = 4p_s, we get:100p_s = 10,400 - 100(4p_s)100p_s = 10,400 - 400p_s500p_s = 10,400p_s = 20.8Therefore, the price received by suppliers will be $20.

Suppose That King Kanuta Demands That Each of His Subjects