Question

17. Given the following supply and demand equations
QD = 100 – 5P
QS = 10 + 5P
a) Determine the equilibrium price and quantity.
b) If the government sets a minimum price of $10 per unit, how many units would be supplied and how many would be demanded?
c) If the govt. sets a maximum price of $5 per unit, how many units would be supplied and how many would be demanded?
d) If the demand increases to
Q’D = 200 – 5P
Determine the new equilibrium price and quantity.

Answer 1

a) $QD=QS$ ; $100-5P=10+5P$ ; $P=9;Q=55$

b) $QD=50;QS=60$

c) $QD=75;QS=35$

d) $200-5P=10+5P$ ; $P=19;Q=105$