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ECO 550 - Question 1

# ECO 550 - Question 1 - ;Qd=5005 a)(\$50...

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Suppose the demand and supply curves for a product are given by a) Graph the supply and demand curves in Excel (use the market  b) Find out (numerically) the market equilibrium price and quantity d) Now the demand shifts in (decrease) by 20% due decrease in c Qd = 500 - 5P Qs = 100 + 5P (a) Demand Supply Mkt Price 300 300 40 250 350 50 175 425 65 50 550 90 -25 625 105 -100 700 120 c) If the current market price of the product is \$50, what is the qua 1 2 3 4 5 -200 -100 0 100 200 300 400 500 600 700 800

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(b) Qd = 500 - 5P Qs = 100 + 5P At Market Equilibrium, Qd = Qs 500 - 5P = 100 + 5P 10P = 400 P = 40 Quantity at this Price Qd = 300 Qs = 300 (c) At market Price of 50, quanitity demanded is 250 and quantity supplied is 350. At this by consumers. Thus, market will move towards equilibrium until both quantity supplied (d) Mkt Price Demand Supply Decrease by 20% increase by 30 % 40 240 390 Qd = 80% (500 - 5P) 50 200 455 Qs = 130% ( 100 +5P) 65 140 552.5 90 40 715 105 -20 812.5 120 -80 910 1 2 3 4 5 6 -200 0 200 400 600 800 1000 Column B Column C
(d) New Equilibrium Price will be as follows Qd = 80% (500 - 5P)

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