Determinants of Equilibrium Price, Quantity And Point With Simple Applications - SS1 Economics Past Questions and Answers - page 1

To find the equilibrium quantity and price, we need to set the quantity demanded (Qd) equal to the quantity supplied (Qs) and solve for p (price) and then substitute p back into either the demand or supply equation to solve for Q (quantity). 1. **Set Qd = Qs:** 60 - 2p = 20 + 4p 2. **Solve for p:** 60 - 20 = 4p + 2p 40 = 6p p = 40/6 = 6.67 3. **Solve for Q:** Substitute p = 6.67 into either the demand or supply equation. Let's use the demand equation: Q =

Solution:

To find the equilibrium level of quantity and price, we need to set the demand function equal to the supply function and solve for Q and p:

Qd = Qs

80 - 3p = 12 + 5p

68 = 8p

p = 8.5

Now that we have the value of p, we can substitute it into either the demand or supply function to find the equilibrium quantity:

Qd = 80 - 3p = 80 - 3(8.5) = 55.5

Qs = 12 + 5p = 12 + 5(8.5) = 53.5

The equilibrium level of quantity is approximately 55.5 units and the equilibrium price is approximately $8.50 per unit.

 

Solution:

To find the equilibrium level of quantity and price, we need to set the demand function equal to the supply function and solve for Q and p:

Qd = Qs

36 - 6p = 30 + 2p

6p = 6

p = 1

Now that we have the value of p, we can substitute it into either the demand or supply function to find the equilibrium quantity:

Qd = 36 - 6p = 36 - 6(1) = 30

Qs = 30 + 2p = 30 + 2(1) = 32

The equilibrium level of quantity is 30 units and the equilibrium price is $1 per unit.

 

An increase in demand causes an increase in both the equilibrium price and quantity of a product.

 

A decrease in production cost causes a decrease in the equilibrium price and an increase in the equilibrium quantity of a product.