Question

The following table depicts the market supply and demand for Video Game Players.

Suppose demand can be described with the equation Q = 900 – 5P and supply with the equation Q = 100 + 5P. Complete the following table.

Determine the equilibrium price and quantity.

Determine the surplus or shortage if the price were $90.

Price	Quantity Demanded	Quantity Supplied	Surplus/ Shortage	Amount of Surplus or Shortage
$100
$95
$90
$85
$80
$75
$70
$65
$60

Answer 1

As per the question the

The market demand function for video game player Q=900-5P

And market supply function for video game player Q=100 + 5P

1. The table is completed based on the given information

Price in $ (P)	Quantity Demanded = 900 – 5P	Quantity Supplied = 100 + 5P	Surplus/ Shortage	Amount of Surplus or Shortage
100	400	600	Surplus	200
95	425	575	Surplus	150
90	450	550	Surplus	100
85	475	525	Surplus	50
80	500	500	Equilibrium	0
75	525	475	Shortage	50
70	550	450	Shortage	100
65	575	425	Shortage	150
60	600	400	Shortage	200

Surplus occurs when    Quantity Supplied is more than Quantity Demand

Surplus = Quantity Supplied - Quantity Demanded

Shortage occurs when Quantity Supplied is less than Quantity Demand

Shortage = Quantity Demanded - Quantity Supplied

2. Equilibrium points occurs when the quantity demanded is equal with quantity supply

So at equilibrium point, Quantity Demanded = Quantity Supplied   

900 -5P = 100 + 5P

800 = 10P

P= $80

Replacing the value of P=80

Q=900-5P = 900 -5(80) = 900 -400 = 500 units

The equilibrium price is $80 and equilibrium quantity is 500 units

Moreover, It is clearly evident from the above diagram that at 500 units of output the Quantity Demanded = Quantity Supplied

3. When the price (P) is = $90

The market demand for video game player Q=900-5P =900-5(90) =450 units

And market supply for video game player Q=100 + 5P = 100 + 5(90) = 550 units

Though the market supply is more than the market demand, so there is surplus

Surplus = Quantity Supplied - Quantity demanded = 550 -450 = 100 units