Finding Equilibrium Price and Quantity for Education at Harvard

In summary, the problem involves finding the equilibrium price and quantity of education units at Harvard, assuming a competitive market with no government intervention. The marginal cost equation is MC = 10X + 100 and the demand function is X^D = 200 - 0.5p. However, the demand equation does not account for an additional benefit to society of $6 per unit of education consumed. To find the equilibrium price and quantity, the MC and demand equations must be set equal to each other. However, this is complicated by the presence of the P variable in the demand equation. Further clarification is needed on the variables and units used in the problem.
  • #1
Trizz
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Homework Statement



Assume Harvard has the following marginal cost equation and acts like a competitive firm:
MC = 10X + 100

The aggregate demand for education at the College is:
X^D("D" simply stands for demand)= 200 - .5p

The demand function above does not account for an additional bene t to society from education.
Speci cally, society bene ts $6 per unit of education consumed.

What is the equilibrium price and quantity of education units (X) if there is no government
intervention.

Homework Equations



Equilibrium occurs when supply equals deman

The Attempt at a Solution



I have MC, which I know also equals the supply. But the thing that throws me off with this problem is the presence of different variables. I cannot solve for X by setting the two equations together because of the existence of the P variable.

Any ideas on how to approach this?

Thanks!
 
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  • #2
Trizz said:

Homework Statement



Assume Harvard has the following marginal cost equation and acts like a competitive firm:
MC = 10X + 100
What does X represent in this equation?
Trizz said:
The aggregate demand for education at the College is:
X^D("D" simply stands for demand)= 200 - .5p
Is this really XD or did you mean XD? As you wrote it, it means X to the power D.

What is p in the demand equation? Price? If so, in what units?
Trizz said:
The demand function above does not account for an additional bene t to society from education.
Speci cally, society bene ts $6 per unit of education consumed.

What is the equilibrium price and quantity of education units (X) if there is no government
intervention.


Homework Equations



Equilibrium occurs when supply equals deman



The Attempt at a Solution



I have MC, which I know also equals the supply. But the thing that throws me off with this problem is the presence of different variables. I cannot solve for X by setting the two equations together because of the existence of the P variable.

Any ideas on how to approach this?

Thanks!
 

What is an econ equilibrium problem?

An econ equilibrium problem refers to a situation in economics where the supply and demand for a product or service are balanced, resulting in a stable price. It is a state of balance where there is no pressure to change the current conditions.

What factors contribute to an econ equilibrium problem?

Several factors can contribute to an econ equilibrium problem, including the availability of resources, consumer preferences, market competition, and government policies. These factors influence the supply and demand for a product or service, ultimately impacting the equilibrium.

How is an econ equilibrium problem represented graphically?

An econ equilibrium problem is represented graphically through a supply and demand curve, where the point at which they intersect represents the equilibrium. The equilibrium price is where the quantity demanded equals the quantity supplied.

What happens if there is a shortage in an econ equilibrium problem?

If there is a shortage in an econ equilibrium problem, the demand for a product or service exceeds the supply, resulting in a higher price. This higher price will incentivize producers to increase their supply, eventually reaching a new equilibrium.

Can an econ equilibrium problem change over time?

Yes, an econ equilibrium problem can change over time due to various factors such as changes in consumer preferences, technological advancements, and shifts in market conditions. These changes can shift the supply and demand curves, resulting in a new equilibrium.

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