Population demand function for this product: Qd = 10 – p, supply function for this product Qs = – 5 + 2p

| May 8, 2021 | education

Population demand function for this product: Qd = 10 – p, supply function for this product Qs = – 5 + 2p. Determine: 1. What is the equilibrium price will be established in the market for this product? 2. How many items will be offered at this price? 3. Determine the volume of unsatisfied demand, if a fixed price is set for this product at the level of 3 den. units.

To determine the equilibrium price for a given product, we must equate supply and demand (Qd = Qs).

10 – p = -5 + 2p.

10 + 5 = 2p + p.

15 = 3p.

p = 15: 3.

p = 5 – this is our equilibrium price.

We substitute in the equation of supply and demand:

Qd = 10 – 5 = 5.

Qs = -5 + 2 * 5 = 5.

Qd = Qs = 5 – the answer is correct.

If the market price is 3 den. units, then:

Qd = 10 – 3 = 7.

Qs = -5 + 2 * 3 = 1.

Demand is greater than supply – a shortage is formed, we calculate it.

Qd – Qs = 7 – 1 = 6.

The volume of unmet demand will be equal to 6.



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