Suppose that the inverse market demand for silicone replacement tips for Sony EX71 earbud headphones is p = Pn - 0.1Q, where p is the price per pair of replacement tips, Pn is the price of a new pair of headphones, and Q is the number of tips per week. Suppose that the inverse supply function of the replacement tips is p = 2 + 0.012Q
A. Find the effect of a change in the price of a new pair of headphones on the equilibrium price of replacement tips at the equilibrium, dP/dPn.
B. If Pn = $30, What are the equilibrium p and Q? What is the consumer surplus? What is the producer surplus?