Question

2. Suppose the demand equation for computers by Teetan Ltd for the year 2017 is given by Qd= 1200-P and the supply equation is given by Qs= 120+3P. Find equilibrium price and analyse what would be the excess demand or supply if price changes to Rs 400 and Rs 120.

Answer 1

Explanation:

Qd= 1200-p

Qs=120+3p

Qd=Qs

1200+p=120+3p

1200-120=3p-p

1080= 2p

p= 540

Equilibrium price is Rs 540

If price change to Rs 400 then,

P = 400

Qd = 1200-400= 800

Qs = 120+ 3×400= 1320

If price change to Rs 120

P= 120

Qd = 1200-120 = 1080

Qs = 120 + 3×120= 480

If prices are Rs 400 supply excess

If prices are Rs 120 demand excess

if prices are Rs 540 demand and supply remain same