Question

1. Consider a demand curve of the form QD = 40 - 2P, where QD is...

1. Consider a demand curve of the form QD = 40 - 2P, where QD is the quantity demanded and P is the price of the good. The supply curve takes the form of QS = -4 + 2P, where QS is the quantity supplied, and P is the price of the good. Be sure to put P on the vertical axis and Q on the horizontal axis. a. What is the equilibrium price and quantity? Draw out the supply and demand curves to illustrate this equilibrium.

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

1. To find the equilibrium quantity and price, we need to equate demand and supply equation-

QD = QS

=> 40 - 2P = -4 + 2P

=> 4P = 44

Therefore, equilibrium price or P* = 11

Similarly,

In order to find the equilibrium quantity, we will put the value of P* in either demand or supply equation.

=>Q* = 40 - 2(11)

=> Q* = 40 - 22 = 18

Thus, Q* or equilibrium quantity exchanges is 18.

The equilibrium can be graphically shown as below-

The point of equilibrium is the intersection of demand and supply curve as represented by point e above.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
8.2 In Smalltown, Pennsylvania, the demand function for men's haircuts is Qd=500−30p+0.08Y, Qd=500−30p+0.08Y, where Qd Qd...
8.2 In Smalltown, Pennsylvania, the demand function for men's haircuts is Qd=500−30p+0.08Y, Qd=500−30p+0.08Y, where Qd Qd is quantity demanded per month, p the price of a haircut, and Y the average monthly income in the town. The supply function for men's haircuts is Qs=100+20p−20w, Qs=100+20p−20w, where Qs Qs is the quantity supplied and w the average hourly wage of barbers. If Y=$5,000 Y=$5,000 and w=$10, w=$10, use Excel to calculate quantity demanded and quantity supplied for p=$5, p=$5, $10, $15,...
A market is described by the following supply and demand curves: QS = 2P QD =...
A market is described by the following supply and demand curves: QS = 2P QD = 400 - 3P Solve for the equilibrium price and quantity. If the government imposes a price ceiling of $70, does a shortage or surplus (or neither) develop? What are the price, quantity supplied, quantity demanded, and size of the shortage or surplus? If the government imposes a price floor of $70, does a shortage or surplus (or neither) develop? What are the price, quantity...
The demand and supply for a good are respectively QD = 16 – 2P + 2I...
The demand and supply for a good are respectively QD = 16 – 2P + 2I and QS = 2P – 4 with QD denoting the quantity demanded, QS the quantity supplied, and P the price for the good. Suppose the consumers’ income is I = 2. 6) Determine the price-elasticity of demand if P = 2. 7) Determine the income-elasticity of demand if P = 2. 8) Determine the price-elasticity of supply if P = 4. 9) Determine consumers’...
Consider the following market. Demand is given by qd = 150 – 2P, where qd is...
Consider the following market. Demand is given by qd = 150 – 2P, where qd is the quantity demanded and P is the price. Supply is given by qs = P, where qs is the quantity supplied.The government implements a tax of $30 per unit to be paid by consumers. What is the new market equilibrium? What is the economic incidence of the tax (that is, who pays for the tax)? How would your answer change if the government implemented...
Consider a market that can be represented by a linear demand curve, QD = 200 –...
Consider a market that can be represented by a linear demand curve, QD = 200 – 2PD, (where QD is the quantity demanded and PD is the price that demanders pay) and a linear supply curve that QS = ½ PS (where QS is the quantity supplied and PS is the price that suppliers get). a. What is the equilibrium price? b. What is the equilibrium quantity? c. What is demand elasticity at the equilibrium point?
ndogenous, exogenous variables; Slope of a line - Equilibrium in the market-place means that quantity supplied...
ndogenous, exogenous variables; Slope of a line - Equilibrium in the market-place means that quantity supplied (Qs) equals quantity demanded (Qd). Consider the following market where quantity demanded and quantity supplied are res given respectively: QS = -8 + 4P and Qd = 42–6P. It follows that the equilibrium price ( Pe) = _________. In the context of the supply and demand model, the two variables (Qd and Qs) are referred to as ____________ variables (endogenous; exogenous). Explain your answer....
Consider a competitive market for a good where the demand curve is determined by: the demand...
Consider a competitive market for a good where the demand curve is determined by: the demand function: P = 5+-1*Qd and the supply curve is determined by the supply function: P = 0.5*Qs. Where P stands for Price, QD is quantity demanded and QS is quantity supplied. What is the quantity demanded of the good when the price level is P = $4? Additionally assume a market intervention of the form of per unit $2 tax on the consumption of...
Question 2. The market supply and demand curves for a product are: QS=0.5P (supply curve) QD=60–2P...
Question 2. The market supply and demand curves for a product are: QS=0.5P (supply curve) QD=60–2P (demand curve) where Q is the quantity of the product and P is the market price. (1). Calculate the equilibrium price, equilibrium quantity and total social welfare. (10 points) (2). Suppose that the market has changed from a perfectly competitive market to a monopoly market, calculate the new price–output combination and the total deadweight loss in the monopoly market. (10 points)
Using the information below answer the following questions. If demand is :Qd = 800 - 5...
Using the information below answer the following questions. If demand is :Qd = 800 - 5 P   and supply is: Qs = 125 + 15 P Where: Qd = quantity of the good demanded.               Qs = quantity of the good supplied.                 P = price of the good. Part 1: The equilibrium price is ______ Part 2: The equilibrium quantity is _________ Part 3: An imposed price of 20.25 yields an excess (demand/supply) of _____ units Part 4: Assuming...
1. Demand and supply curves can be represented with equations. If Qd = 90 - 2P...
1. Demand and supply curves can be represented with equations. If Qd = 90 - 2P and Qs = P, then equilibrium price P* and equilibrium quantity Q* are a. P* = 30, Q* = 60 b. P* = 60, Q* = 30 c. P* = 30, Q* = 30 d. P* = 60, Q* = 60 2. Suppose that scientists find evidence that coffee consumption lowers cholesterol. If so, a. demand for coffee would remain the same b. quantity...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT