Question #71194
A certain market for commodity x contains 1,000 identical consumers, each having a demand function given as: Qdx=12-2px
The market contains 100 identical producers of commodity x, each with a supply function given by Qsx=20px
Qdx is the quantity demanded of x
Qsx is the quantity supplied of x
Px is the price of x
Required:
1. the market demand and market supply functions of commodity x
The market contains 100 identical producers of commodity x, each with a supply function given by Qsx=20px
Qdx is the quantity demanded of x
Qsx is the quantity supplied of x
Px is the price of x
Required:
1. the market demand and market supply functions of commodity x
Expert's answer
We know that market demand function is the sum of demand functions of all the consumers in the market.
So, in this case it is just 1000 times the given demand function.
MQdx = 12000 – 2000Px is the required Market demand function.
Qsx = 20Px is supply function of a single producer.
We know that market demand function is the sum of supply functions of all the producers in the market.
So, in this case it is just 100 times the given supply function.
MQsx = 2000Px is the required Market supply function.
So, in this case it is just 1000 times the given demand function.
MQdx = 12000 – 2000Px is the required Market demand function.
Qsx = 20Px is supply function of a single producer.
We know that market demand function is the sum of supply functions of all the producers in the market.
So, in this case it is just 100 times the given supply function.
MQsx = 2000Px is the required Market supply function.
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Imagine the tea market has a demand function of QDX = 10 – 2PX and a supply function of QSX = PX − 2, where PX is the price of the tea. Assuming the price is at equilibrium, calculate the equilibrium price (P*).