Question

For the following set of demand and supply, equations do the following, Find the equilibrium price...

For the following set of demand and supply, equations do the following,

  1. Find the equilibrium price and equilibrium quantity for each set of equations.
  2. Draw each set of equations in a clearly labeled graph and show the equilibrium P and Q.
  3. Calculate the producer surplus at the equilibrium P and Q found in b.
  4. If the price were to increase, calculate the total new producer surplus. Calculate the gain in the producer surplus
  5. If the price were to decrease, calculate the new producer surplus. Calculate the loss in the producer surplus.
  6. Draw c, d and e showing all the points/areas.

Show all your workings*

Equation set one

P=50-2Q

P=20+0.5Q

Equation set Two

P=5000-0.5Q

P=250+0.5Q   

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Homework Answers

Answer #1

the solution for the following question: for equilibrium equate both equations. Plot the equations on the graph. For producer surplus use area of a triangle formula

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