Question

In: Economics

Demand function is: Q = 16 – p. Supply function is: Q = -4 + p....

Demand function is: Q = 16 – p. Supply function is: Q = -4 + p. (Show me your math)

a) What is the quantity demanded and quantity supplied at price 6? Is there an excess demand or supply?

b) What is the equilibrium price and quantity?

Solutions

Expert Solution

(a) At price = 6

Quantity demanded = 16 - 6 = 10

Quantity supplied = -4+6 = 2

Thus, there is excess demand as Quantity demanded > Quantity supplied

(b) equilibrium occurs when Quantity demanded = Quantity supplied

=> 16 - p = -4 + p

=> 2p = 20

=> p =10

=> q = 16 - 10 = 6

Rahul Sunny answered 1 year ago
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