Question

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

This is the answer 100 percent correct

At equilibrium price, the quantity demanded is equals to the quantity supplied to the market.
This implies that Demand=Supply,
Q
d
=
Q
s
Qd=Qs

1200
−
P
=
120
+
3
P
1200−P=120+3P
Solving the above
4
P
=
1080
4P=1080
Hence Equilibrium price
P
=
R
s
270
P=Rs270

When price Rises to Rs 400
Q
s
=
120
+
(
3
×
400
)
Qs=120+(3×400)
Q
s
=
1320
Qs=1320
and
Q
d
=
1200
−
400
=
800
Qd=1200−400=800
From the above price Rd 400, we can say that There is more supply than Demand because the price is high.

When Price rises to Rs 120
Q
s
=
120
+
(
3
×
120
)
Qs=120+(3×120)
Q
s
=
R
s
480
Qs=Rs480
And
Q
d
=
1200
−
120
=
R
s
1080
Qd=1200−120=Rs1080

The above price change implies that there is more demand than supply as the price is low.



Hope its helpful.....