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Supply and Demand: Equilibrium, Markup, Retail Pricing

Learn slopes of supply and demand curves, find equilibrium points, and analyze markup impact on retail prices using real-world examples and key terms.

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Supply and Demand: Equilibrium, Markup, Retail Pricing

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  1. 2-3SUPPLY AND DEMAND OBJECTIVES Understandthe slopes of the supply and demand curves. Findpoints of equilibrium.

  2. widget function demand function demand supply wholesale price markup retail price equilibrium shift Key Terms

  3. Example 1 The Wacky Widget Company sells widgets for $2.00 each wholesale. A local store has a markup of $1.59. What is the retail price?

  4. CHECK YOUR UNDERSTANDING The wholesale price of an item is x dollars. The retail price is r dollars. Express the markup algebraically.

  5. Example 2 The Robear Corporation sells teddy bears at a wholesale price of $23.00. If a store marks this up 110%, what is the retail price?

  6. EXAMPLE 3 The graph shows the supply and demand curves for a widget. Explain what happens if the price is set at $9.00.

  7. CHECK YOUR UNDERSTANDING Use the graph to explain what happens if the price is set at $15.00.

  8. EXAMPLE 4 A company wants to base the price of its product on demand for the product, as well as on expenses. It takes a poll of several of its current retailers to find out how many widgets they would buy at different wholesale prices. The results are shown in the table. The company wants to use linear regression to create a demand function. What is the equation of the demand function? Round the slope and y-intercept to the nearest hundredth.

  9. CHECK YOUR UNDERSTANDING Explain why it makes sense that the demand function has a negative slope.

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