Question

Suppose the demand and supply for a product is given by the following equations:

**p****=****d****(****q****)=−0.8****q****+150**
**(Demand)**

**p****=****s****(****q****)=****5.2****q**
**(Supply)**

For both functions, q is the quantity and p is the price.

- Find the equilibrium point. (Equilibrium price and equilibrium quantity) (1.5 Marks)
- Compute the consumer surplus. (1.5 Marks)
- Compute the producer surplus. (1.5 Marks)

Answer #1

The demand for a product is given by p = d ( q ) = − 0.8 q + 150
and the supply for the same product is given by p = s ( q ) = 5.2
q. For both functions, q is the quantity and p is
the price in dollars. Suppose the price is set artificially at $70
(which is below the equilibrium price).
a) Find the quantity supplied and the quantity demanded at this
price.
b)...

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