Answer to Question #132681 in Microeconomics for vanessa fernandes

Question

Price per Ice-cream (Rs.) Demand for Ice cream (Qd) Supply for Ice cream (Qs)
140 500 1500
120 750 1200
100 1000 1000
80 1250 750
60 1500 600
40 1750 300

(i) Draw the market equilibrium for Ice cream. (2 Marks)
(ii) Find out equilibrium price and quantity.

Answer 1

(i) The market equilibrium for the data is shown on the illustration bellow.

The market equilibrium point is marked e. At this point, supply and demand interact and Qd = Qs.

(ii) The market is in equilibrium when demand and supply curves interact. This is labelled e on the graph in (i) above. At this equilibrium, $Qd = Qs.$

$Thus, \\ Equilibrium \space price = Rs. \space 100$

$Equilibrium \space quantity = 1000 \space units$