Answer to Question #166415 in Economics for Banda jackson

Question

a.     A market consists of 5000 identical households and 100 identical producers. The demand equation for a typical household over a week is given by

 Where i= 1, 2, 3…,5000

 

And the supply equation for a typical firm over a week I given by

 

  Where j= 1,2,3…..,100

                          i.         Write the market demand and supply equations

Answer 1

Supply, demand, and prices are the main parameters that govern the behavior of market participants.

Price is a monetary expression of the value of goods or services. The price is denoted by the letter P - price.

Demand is the relationship between price and a buyer who is willing to purchase goods. The higher the price, the fewer goods buyers are willing to buy. Demand is denoted by the letter D - demand.

An offer is a sale between the price and the product that they are ready to put up for manufacturers. The higher the price, the more manufacturers are ready to produce products. The offer is designated by the letter S - offer.

What does demand create supply?

Prices, demand, and supply are linked. In a market economy, an increase in the level of demand for a product increases its prices, and this makes the production of a product more profitable. Manufacturers are increasing production and increasing supply. This continues until the demand equals the supply - an equilibrium price is established.