Answer to Question #74726 in Microeconomics for Mohsin

Question

Suppose the demand for Frisbees is given by (05+05+10)

Q= 100-2P

And the supply by

Q= 20-6P

a) What will be the equilibrium price and quantities for Frisbees?

b) Suppose the government levies a tax of Rs: 4 per freebies. Now what will the equilibrium quantity, the price consumers will pay, and the price firms will receive?

c) How would your answers to parts (a) and (b) change if the supply were instead Q= 70+ P

Answer 1

The equation of supply is incorrect,because it has negative sloap
We can only calculate equilibrium price and quantity in part ( c):
100-2P=70+P
3P=30
P=10
Q=80