Question

In: Economics

If demand is :Qd = 850 - 15 P and supply is: Qs = 100 + 15 P Where: Qd = quantity of the good demanded. Qs = quantity of the good supplied.

If demand is :Qd = 850 - 15 P and supply is: Qs = 100 + 15 P

Where: Qd = quantity of the good demanded.

Qs = quantity of the good supplied.

P = price of the good.

Part 1: The equilibrium price is ____________

Part 2: The equilibrium quantity is ____________

Part 3: An imposed price of 15 yields an excess __________ of ____________ units.

Part 4: Assuming a change in consumer preference shifts the demand curve to Qd'= 680 - 15 P, the new equilibrium price is ____________

Part 5: With the new demand in part 4, the new equilibrium quantity is ____________

Expert Solution

Part 1 and 2)

•Qd=850-15P

•Qs=100+15P

At Equilibrium Qd=Qs

850-15P=100+15P

750= 30P

P*=Equilibrium price

Equilibrium price= 25

Q*= Equilibrium quantity

Q*= 850-15(P*) or 100+15(P*)

Equilibrium quantity= 475

Part 3) At a price of 15

Qd= 850-15P

Qd= 850-15(15)

Qd= 625

Qs= 100+15P

Qs= 100+15(15)

Qs= 325

Excess demand= 625-325 = 300

Part 4 and 5)

•New Qd'= 680-15P

• Qs=100+15P

At new Equilibrium, New Qd'= Qs

680-15P=100+15P

580=30P

P'= 58/3

Q'= 680-15(P') or 100+15(P')

Q'= 390

P'= New Equilibrium price

New Equilibrium price= 58/3

Q'= New Quantity

Q'= 390

Rahul Sunny answered 2 years ago

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