Suppose the demand and supply curves for a good are given by:
Qd =500 - 2P
Qs = -100 + 3P
a. Graph the supply and demand curves.
b. Find the equilibrium price and quantity.
c. If the current price of the good is $100, what is the quantity demanded? What is the quantity supplied? How would you describe this situation? Equilibrium? Shortage? Or Surplus? What would you expect to happen in this market?
d. If the current price of the good is $150, what is the quantity supplied and demanded? How would you describe this situation? Equilibrium? Shortage? Or Surplus? What would you expect to happen in this market?
e. Suppose that the demand changes to Qd = 600-2P . Find the new equilibrium price and quantity. Show this point on your graph.