Answer to Question #106083 in Microeconomics for Cindy Seenaram

Question

D = 50 - 0.5P and S= 20 + 0.25P

Calculate Quantity Demanded when price is 10
Calculate Quantity Demanded when price is 20
Calculate the equilibrium prices and quantities
Calculate the Shortage / Surplus if government imposes a regulatory price of Rs. 60

Answer 1

$D=50−0.5P$ ,$S=20+0.25P$

a. Qd when P = $10,

$Qd = 50 - 0.5 \times10$ = 45 units.

b. Qs when P = $20

$Qs = 20 + 0.25 \times 20$ = 25 units.

c. At equilibrium, Qd = Qs,

$Qe=45+\frac{25}{2}$ =35 units

P= $15

d. shortage /surplus

$D=50 -0.5\times60$ =20 units

$S=20+0.25\times60$ =35 units