Answer to Question #174462 in Microeconomics for Elliot Bansah

Question

The following are demand and supply functions

Qd=17-2P ;Qs=2+3P

Where Qd is quantity demanded,Qs is quantity supplied,and P is price.

I. Find the equilibrium price and quantity demanded and supplied.

II. Given another demand function: Qd=20-3P and also using the demand function in (i), find the market demand when price,P is GH¢2.00.

Answer 1

Solution:

I.). At equilibrium: Qd = Qs

17-2P = 2+3P

17-2 = 3P+2P

15 = 5P

P = $\frac{15}{5}$ = 3

Q = 17-2(3) = 17-6 = 11

Equilibrium price = 3

Quantity demanded and supplied = 11

II). Market demand (Q) = Demand function 1 (Q₁) + Demand function 2 (Q₂)

Q = 17-2P + 20-3P

Q = 17+20 – 2P-3P

Q = 37 – 5P

Market demand (Q) = 37 – 5P