Worldwide quarterly sales of a brand of cell phones were approximately q = - p + 156 million phones when the wholesale price was $p.

A) If the cell phone company was prepared to supply q = 4p - 394 million phones per quarter at a wholesale price of $p, what would have been the equilibrium price?

B) The actual wholesale price was $105 in the fourth quarter of 2004. Estimate the projected shortage or surplus at that price.

a) $110

b) shortage of 25 million phones

Step-by-step explanation:

Quantity demanded (q) = - p + 156

Quantity supplied (q) = 4p - 394

a) at equilibrium, quantity demanded equals quantity supplied

-p+156 = 4p-394

-p-4p = - 394 - 156

-5p = - 550

p = - 550/-5

p = $110

The wholesale price at equilibrium = $110

b) quantity demanded (q) = - p + 156

at p = $105

q = - 105 + 156

q = 51 million

Quantity supplied (q) = 4p - 394

at p = $105

q = 4 (105) - 394

q = 420 - 394

q = 26 million

Since the quantity supplied is less than quantity demanded, there will be a shortage.

Shortage = 51 - 26

= 25 million phones