Question

Request and Supply functions. At the price per unit of Rp. 80, the number of goods increased by 120 units, and there was an excess demand of 60 units. After the goods increased by 50% from the previous price the number of goods offered increased by 80 units and there was an oversupply of 60 units. Bid Request Function and Bid Function.

Answer 1

When price is Rp. 80, supply increased by 120 units (say120 units) and demand was 180 units (as there is an excess demand of 60 units).

Again, when price is Rp. 120 (increased by 50%), supply of goods was 200 units (increased by 80 units) and demand was 140 units (as there was an oversupply of 60 units).

Thus, taking price on y-axis and quantity of goods on x-axis,

Bid request function can be given by : (P-120/(80-120) = (Q-140)/(180-140)

or, (P-120)/-40 = (Q-140)/40

or, P-120 = -Q+140

or, P = 260-Q is the bid request function

Similarly, Bid supply function can be given by : (P-120)/(80-120) = (Q-200)/(120-200)

or, (P-120)/-40 = (Q-200)/(-80)

or, 2P-240 = Q-200

or, 2P = 40+Q is the bid supply (offer) function.