Suppose the demand and supply curves of a Commodity - X is given by the following two equations simultaneously:
Qd = 200-p Qs = 50+2p
(i) Find the equilibrium price and equilibrium quantity.
(ii) Suppose that the price of a factor of production producing the commodity has changed, resulting in the new supply curve given by the equation
Qs' = 80+2p
Analyse the new equilibrium price and new equilibrium qunatity as against the original equilibrium price and equilibrium qunatity.

Open in App

Solution

We know that the equilibrium price and quantity are achieved at:
$Q_{d} = Q_{s} 200 - p = 50 + 2 p ∴ Equilibrium price p = 50$

and Equlibrium Qunatity q = 200-50 = 150 units
(ii) If the price fo factor of production has changed, then under the new conditons.
$Q_{d} = Q_{s} 200 - p = 80 + 2 p (-) 3 p = (-) 120$
Therefore, Equilibrium Price P = 40
And, Ewquilibrium Quantity q = 200-40 = 16 nits
Thus as the equilibrium price is decreasing the equilibrium quantity is increased.

Suggest Corrections

Similar questions

Suppose the value of demand and supply curves of a Commodity-X is given by the following two equations simultaneously:

Qd = 200 –10p Qs = 50 + 15p

i) Find the equilibrium price and equilibrium quantity of commodity X.

ii) Suppose that the price of a factor inputs used in producing the commodity has changed, resulting in the new supply curve given by the equation

Qs’ = 100 + 15p

Analyse the new equilibrium price and new equilibrium quantity as against the original equilibrium price and equilibrium quantity.

Suppose the demand and supply curves of a commodity are given as:
$Y^{d} = 200 - p$
$Y^{s} = 120 + p$
(i) Find the equilibrium price and equilibrium quantity.
(ii) Also show that at a price of Rs. 30, there is excess demand and at a price of Rs. 45, there is excess supply.

Q. Suppose the demand and supply curves of salt are given by:
Qd = 1000 - p
Qs = 700 + 2p
(a) Find the equilibrium price and quantity.
(b) Now suppose that the price of an input used to produce salt increased so that the new supply curve is
Qs = 400 + 2p
How does the equilibrium price and quantity change?
(c) Suppose that the government has imposed a tax of Rs. 3 per unit of sale. How does it affect the equilibrium price and quantity?

Suppose the demand and supply curves of salt are given by:

q^D = 1,000 − p q^S = 700 + 2p

(a) Find the equilibrium price and quantity.

(b) Now, suppose that the price of an input that used to produce salt has increased so, that the new supply curve is

q^S = 400 +2p

How does the equilibrium price and quantity change? Does the change conform to your expectation?

(c) Suppose the government has imposed a tax of Rs 3 per unit of sale on salt. How does it affect the equilibrium price and quantity?

Q. Suppose the demand and supply curves of salt are given by:

Q_{d} = 1, 000 - p, Q_{s} = 700 + 2 p

(a) Find the equilibrium price and quantity.
(b) Now suppose that the price of an input used to produce salt has increased so that the new supply curve is:

Q_{s} = 400 + 2 p

How does the equilibrium price and quantity change? Does the change conform to your expectation?
(c) Suppose the government has imposed GST which raises the cost by

R s .3

per unit of output. How does it affect the equilibrium price and quantity?

Join BYJU'S Learning Program