# Economics - demand curve, price and equilibrium

• jalen
In summary: Qd Qd=175 Supply 450=-300+2Qs 750=3Qs Qs=250 Qs-Qd 250-175=75 Qd-Qs275-183.3=91.7
jalen
Suppose the demand curve for apples is P=800-2Qd. Where P is the price per pound(in cents) of an apple and Qd is the quantity demanded per year(in millions of pounds). Suppose that the supply curve for apples is: p=-300+3Qs. Where P is the price per pound(in cents) of an apple and Qs is the quantity supplied per year(in millions of pounds).

a) Calculate the equilibrium quantity and price of apples.

800-2Q=-300+3Q
1100=5Q
Q=220

Demand: 220=800-2Qd
-580=-2Qd
Qd=290

Supply: 220=-300+3Qs
520=3Qs
Qs=173

Please check if my calc are correct =)

b)Suppose the government puts in a price floor of $4.50 per pound on apples. How big will the surplus of apples be? Show your work. I'm not sure about this question...would you just make the$4.50 equal to one of the above equations?

c)Suppose the government puts in a price ceiling of $2.50 per pound on apples. How big will the shortage of apples be? Show your work. ...and same thing for this one? Last edited: a) Q = 220 is the equilibrium quantity common to both demand and supply. If you substitute 220 into either Qd or Qs the result will be the equilibrium price (again, common to demand and supply). b) You would put 450 cents on the left-hand side of both equations, then solve for Qd and Qs separately. The difference Qs - Qd is the surplus. c) Same idea as in b, except the shortage is Qd - Qs. jalen said: Suppose the demand curve for apples is P=800-2Qd. Where P is the price per pound(in cents) of an apple and Qd is the quantity demanded per year(in millions of pounds). Suppose that the supply curve for apples is: p=-300+3Qs. Where P is the price per pound(in cents) of an apple and Qs is the quantity supplied per year(in millions of pounds). a) Calculate the equilibrium quantity and price of apples. 800-2Q=-300+3Q 1100=5Q Q=220 Yeah, this part looks right. jalen said: Demand: 220=800-2Qd -580=-2Qd Qd=290 You made a mistake here. You already found quantity (Q) in part one, so now you need to find price (P). So plug in Q=220 (found in part a) and solve for P. You plugged in P=220 and solved for Q (which is backwards). jalen said: Supply: 220=-300+3Qs 520=3Qs Qs=173 Please check if my calc are correct =) Again, you mixed up your variable. You already found Q, so you need to find P. Essentially, you are trying to find an equilibrium P and Q so they will be the same whether you use the supply or demand functions. Essentially, you are finding the intersection point of two lines. jalen said: b)Suppose the government puts in a price floor of$4.50 per pound on apples. How big will the surplus of apples be? Show your work.

I'm not sure about this question...would you just make the $4.50 equal to one of the above equations? On this problem you will use P=450 and solve for Qs and Qd. Since we are not in equlibrium this time, Qs and Qd will not be equal. In this case you'll need to use a little intuition. If you want 3 cheeseburgers at a price of$2, but McDonalds wants to sell you 10 cheeseburgers at a price of $2, how many cheeseburgers will you purchase? Apply this same logic to the question above. You can calculate the surplus by finding the area of the "dead weight loss." It will help to draw a graph. jalen said: c)Suppose the government puts in a price ceiling of$2.50 per pound on apples. How big will the shortage of apples be? Show your work.

...and same thing for this one?

Same process as part b, and again you'll need to use some intuition to figure out what's going on. In this case, let's say that cheeseburger are \$1 and you want to buy 5 of them, but McDonalds only wants to sell 2 of them, how many will be sold?

Again you will also have to draw a graph and calculate the area of a triange.

Try the problems again, and then type in your answers. I will check them for you to see if they are correct.

Last edited by a moderator:
b)Demand 450=800-2Qd
-350=-2Qd
Qd=175

Supply 450=-300+2Qs
750=3Qs
Qs=250

Qs-Qd
250-175=75

c) Demand 250=800-2Qd
-550=-2Qd
275=Qd

Supply 250=-300+3Qs
550=3Qs
183.3=Qs

Qd-Qs
275-183.3=91.7

Also, is the graph suppose to look similar to an AS AD curve?

jalen said:
b)Demand 450=800-2Qd
-350=-2Qd
Qd=175

Supply 450=-300+2Qs
750=3Qs
Qs=250

Qs-Qd
250-175=75

c) Demand 250=800-2Qd
-550=-2Qd
275=Qd

Supply 250=-300+3Qs
550=3Qs
183.3=Qs

Qd-Qs
275-183.3=91.7

Also, is the graph suppose to look similar to an AS AD curve?

The numbers look correct.

The graph will be a supply and demand graph.

## 1. What is a demand curve?

A demand curve is a graphical representation of the relationship between the price of a product or service and the quantity that consumers are willing and able to purchase at that price. It slopes downward from left to right, indicating that as the price increases, the quantity demanded decreases.

## 2. What factors can shift the demand curve?

The demand curve can shift due to changes in consumer preferences, income levels, the price of related goods, and population size. Additionally, external factors such as economic conditions and advertising can also impact the demand curve.

## 3. How does the demand curve relate to equilibrium?

Equilibrium occurs when the quantity demanded equals the quantity supplied, represented by the point where the demand curve and supply curve intersect. If the price is below equilibrium, there is excess demand, leading to a shortage and upward pressure on prices. If the price is above equilibrium, there is excess supply, leading to a surplus and downward pressure on prices.

## 4. What is the relationship between price and quantity on the demand curve?

The demand curve shows an inverse relationship between price and quantity demanded, meaning that as the price increases, the quantity demanded decreases. This is because consumers are less willing to pay higher prices for a product or service.

## 5. How does elasticity affect the demand curve?

Elasticity measures the responsiveness of quantity demanded to a change in price. If a product is highly elastic, a small change in price will result in a significant change in quantity demanded. This will be reflected in a flatter demand curve. On the other hand, if a product is inelastic, a change in price will have little impact on quantity demanded, resulting in a steeper demand curve.

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