Suppose the demand function is Qd = 100 -Р, and the supply function Qs = 2 – Р – 50, where Р is the price in rubles

Suppose the demand function is Qd = 100 -Р, and the supply function Qs = 2 – Р – 50, where Р is the price in rubles, the quantity of demand Qd and supply Qs in thousands of pieces a) Find the equilibrium price and the equilibrium quantity. B) If the government will decide to reduce the price to 25 rubles, trying to stimulate the consumer, what will this lead to? Determine the values of supply and demand, whether there is an excess supply (overproduction, overstocking) or excess demand (shortage), what is the volume of consumption?

Given:

demand function: Qd = 100 – P,

supply function: Qs = 2P – 50.

Find: 1) the equilibrium price and the equilibrium quantity.

In order to find the equilibrium price, it is necessary to equate the supply and demand function:

Qs = Qd,

100 – P = 2P – 50,

– 3P = – 150,

P = 50 (rubles).

Now we can find the equilibrium quantity, we need to substitute the equilibrium price into the demand function:

Qd = 100 – P,

Qd = 100 – 50,

Qd = 50 (thousand pieces).

2) If we reduce the price to 25 rubles, then:

the volume of demand will be:

Qd = 100 – 25,

Qd = 75 (thousand pieces).

volume of the offer:

Qs = 2 * 25 – 50,

Qs = 0,

75 – 0 = 75 (thousand pieces).

If the government lowers the price to 25 rubles, then there will be a shortage of goods in the amount of 75 thousand pieces.