Answer to Question #93072 in Microeconomics for zanele

Question

A small town produces good quality maize. Let us consider a market for the maize produced here. The farmers in this town distribute and sell their produce to three retail stores in the nearby city: Company A, Company B and Company C.

 The market supply for maize is given as Qs = 14 000 + 17.5p.  The demand curves for maize by Companies A, B and C are respectively: Qd = 40 000 – 12.5p; Qd = 30 000 – 5p; and Qd = 20 000 – 3p.

Note: P represents the different price levels for maize. Qs is the market supply of maize by the farmers from the small town. Qd is the quantity demanded by each retail store

Answer 1

Qs = 14 000 + 17.5p

Qd = 40 000 - 12.5p + 30 000 - 5p + 20 000 - 3p

Qd = 90 000 - 20.5p

At equlibrium Qd = Qs

90 000 - 20.5p = 14 000 + 17.5p

90 000 - 14 000 = 17.5p + 20.5p

76 000 = 38p

p = 2 000

Qs = 14 000 + 17.5(2 000)

Qs = 14 000 + 35 000

Qs = 49 000