Qd= 300-20P Qs= -100+20P
a. Find the equilibrium quantity and price and illustrate the same on a graph. Also, explain if it is static or comparative equilibrium.
b. Suppose the price is fixed at Rs. 5, now find if the market is in equilibrium or not? Illustrate it graphically also and explain about the demand and supply.
c. Suppose the price is fixed at Rs. 15, now find if the market is in equilibrium or not? Illustrate it graphically also and explain about the demand and supply.
d. Suppose the good in question is normal explain the effect of increase in the consumer income on the equilibrium. Also, explain if it is static or comparative equilibrium with the reference to your answer in part a. (Hint: Take a hypothetic point to find the new equilibrium and explain what would happen to price and quantity)
Answers
Explanation:
QD = QS
300-20p = -100+20p
300+100 = 20p+20p
400 = 40p
p= 400/40
P = 10
a.
300-20P= -100+20P
300-20×10 = -100+20×10
100= 100
Equilibrium price is 10 and equilibrium quantity is 100
b.
300-20p= -100+20p
300-20×5 = -100+20×5
200 = 0
Rs 5 is not a equilibrium price
c.
300-20p = -100+20p
300-20×15 = -100+20×15
0 = 200
Rs 15 is not a equilibrium price
Answer:
Explanation:
QD = QS
300-20p = -100+20p
300+100 = 20p+20p
400 = 40p
p= 400/40
P = 10
a.
300-20P= -100+20P
300-20×10 = -100+20×10
100= 100
Equilibrium price is 10 and equilibrium quantity is 100
b.
300-20p= -100+20p
300-20×5 = -100+20×5
200 = 0
Rs 5 is not a equilibrium price
c.
300-20p = -100+20p
300-20×15 = -100+20×15
0 = 200
Rs 15 is not a equilibrium price
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