Question

Given the demand and supply equations: Q P D = 60 − 4 and Q P S = −10 + 6 , complete the table below,

plot the two curves and hence determine equilibrium price and quantity. Mark the regions that measure

the consumer’s and producer’s surpluses in the graph.

Answer 1

$E_P=5.75$ represents the equilibrium price

$E_Q=30$ represents the equilibrium quantity.

Producer surplus is represented by the area above the supply curve but beneath the equilibrium price.

Consumer surplus is represented by the area above the equilibrium price but beneath the demand curve.