Question

9. Consider the market for sewing machine. The demand for sewing machine is represented by
the equation: P = 110 – 20QD and the supply of sewing machine is represented by the equation:
P = 10 + 5QS.
a) Calculate the equilibrium price and quantity of sewing machine.
b) If the market price becomes $45, what will happen to demand and supply of sewing machines
in the market?

Answer 1

Explanation:

9. Consider the market for sewing machine. The demand for sewing machine is represented by

the equation: P = 110 – 20QD and the supply of sewing machine is represented by the equation:

P = 10 + 5QS.

a) Calculate the equilibrium price and quantity of sewing machine.

b) If the market price becomes $45, what will happen to demand and supply of sewing machines

in the market

Answer 2

Answer:

a) The price is 30 and quantity is 4.

b) Demand is decreased and supply is increased.

Explanation:

In this question we have to calculate the equilibrium of price and supply of sewing machines. As we know that in equilibrium the supply and demand is always same. Hence, to calculate the price we put QS and QD equal. By putting then equal we get:

$\frac{-p-110}{20}=\frac{p-10}{5}$

By solving this equation we get the value of P which is 30. Now we put the value of P in equation (ii) to find the equilibrium quantity.

$30=10+5QS\\QS=\frac{20}{5} \\QS=4$

Hence, the quantity is 4.

b) Now in this part we have to calculate the effect on demand and supply when the price becomes $45.

First we put $45 in equation of demand:

     $45=110-20QD$

$20QD=65$

  $QD=3.25$

Now we put $45 in supply equation:

$45=10+5QS$

$35=5QS$

$7=QS$

Hence, when price is 45 the demand of sewing machine decreases and the supply of sewing machine increases.

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