Tuesday, July 22, 2014

A market has a supply curve that is given by: Qs =100-10p. Two types of consumers: Qdc = 90-4p, Qda= 70-16p. What is the equilibrium price?

In the question you have provided a supply curve and two demand
curves for different categories of customers.


A supply curve in
almost all cases is one that is upward sloping. This follows from the fact that as the price of a
product goes up, the producers are willing to produce a larger quantity of the product as the
profit made by them per unit goes up.


The equation you have given
for the supply curve: Qs = 100 - 10p, is a downward sloping curve. As it can be seen, with an
increase in price the quantity supplied decreases. This is not a characteristic of a supply
curve, but rather is something displayed by the demand curve. With Qs = 100 - 10p, we see that
the supply at a price of p = 0 is 100. This implies producers are willing to supply 100 units for
free which is completely improbable.


Unless the correct supply
equation is given, the equilibrium price cannot be calculated.

No comments:

Post a Comment

How is Anne's goal of wanting "to go on living even after my death" fulfilled in Anne Frank: The Diary of a Young Girl?I didn't get how it was...

I think you are right! I don't believe that many of the Jews who were herded into the concentration camps actually understood the eno...