Answer to Question #93018 in Microeconomics for SHAMEEMA MANUEL

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.


Calculate the equilibrium market price and equilibrium quantity for maize.

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