Answer to Question #145656 in Microeconomics for Caroline Mwatela

Question

i) Given the following demand and supply functions determine the equilibrium price and quantity

Qd = 14-2P; Qs= 2+4P

ii) What factors cause the occurrence of an inverse demand curve

Answer 1

(i) in equilibrium,

$Q_{d} = Q_{s}$

$14-2P=2+4P$

$6P=12$

$P=2$

$Q_{d}=Q_{s} = 14-2P=14-2(2) = 14-4 = 10$

(ii) changes in the quantity demanded lead to changes in price levels, which is the inverse of a demand curve.