Question

4) Suppose the demand and supply curves for eggs are given by the following equations:
Qd = 100-20P
Qs = 10 + 40P
a) Fill up the following:
Price Qd Qs
.50 _____ _____
1.00 _____ _____
1.50 _____ _____
2.00 _____ _____
2.50 _____ _____
b)Use the information in the table to find the equilibrium price and quantity
c) Graph the demand supply curves and identify the equilibrium price and quantity

Answer 1

When the price ;

$0.5$

$Qd = 100-20(0.5) = 90$

$QS = 10+40(0.5) = 30$

$1$

$Qd = 100-20(1) = 80$

$QS = 10 + 40(1) = 50$

$1.5$

$Qd = 100-20(1.5) = 70$

$QS = 10+40(1.5) = 70$

$2$

$Qd = 100-20(2) = 60$

$QS = 10 + 40(2) = 90$

$2.5$

$Qd = 100-20(2.5) = 50$

$QS = 10 + 40(2.5) = 110$

Equilibrium price

$100-20p = 10+40p$

$100-10 = 40p +20p$

$90 = 60P$

$P = \frac{90}{60} = 1.5$

Equilibrium price = 1.5

Equilibrium quantity

$Qd = 100-20p$

$= 100-20(1.5) = 70$

$Equilibrium quantity = 70$