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Consider the following demand and supply equations for sugar: Q_D=1000-1000P〖 Q〗_S=800-1000P Where P is the price...

Consider the following demand and supply equations for sugar: Q_D=1000-1000P〖 Q〗_S=800-1000P Where P is the price of sugar per pound and Q is thousands of pounds of sugar. a) What are the equilibrium price and quantity for sugar? b) Show graphically the equilibrium price and quantity. Indicate the occurrence of shortage and surplus when disequilibrium arises.

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Homework Answers

Answer #1

Qd = 1000 - 1000P

Qs = 800 + 1000P

a) Equllibrium price

Qd = Qs

1000 - 1000P = 800 +1000P

200 = 2000P

P = 0.1$

Equllibrium price = 0.1 $

Quantity = 1000 - 1000P = 1000 - 0.1x1000

Quantity = 900

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