Question

Starting with the market demand and supply functions in Problem 1, determine algebraically the new equilibrium price and quantity if; the demand function changes to QD' = 12,000 - 1,000 P or to QD" = 8,000 - 1,000 P, or the market supply function changes to QS* = -4,000 + 1,000 P or to QS** = 1,000 P. Draw a figure for parts (a) and (b) and label E' and E". respectively, the equilibrium point resulting when the market demand changes to QD' or QD"; label E* and E**, respectively, the equilibrium point resulting when the market supply function changes to QS* or QS**; on the same figure, label F the equilibrium point resulting with QD' and QS*, label G the equilibrium resulting with QD" and QS**, label H the equilibrium resulting with QD" and QS**, and label J the equilibrium resulting with QD" and QS*  

Answer 1

   IN A DEMAND SUPPLY SCHEDULE EQUILIBRIUM IS OCCURED BY EQUALITY OF DEMAND AND SUPPLY.

THE DETAILED EXPLANATION IS ATTACHED BELOW.

IMAGE 1: (DERIVATION OF OLD EQUILIBRIUM)

IMAGE 2: (DERIVATION OF NEW EQUILIBRIUM)

IMAGE 3: ( DERIVING INVERSE DEMAND AND SUPPLY FUNCTION)

IMAGE 4:(PLOTTING THE POINTS ON DIAGRAM)