Use the supply and demand equations below to answer the following questions.
P = 25 - 2 * Qd
P= 3 * Qs
Using excel, graph the supply and demand curves. Be sure to label EVERYTHING.
Assume an imposed price of 9.
At a price of 9, would there be a surplus of shortage of the good?
How large would this shortage or surplus be?
Using the equations above, solve for the equilibrium price and quantity.
Assuming a continuous demand and supply curve, what is the total consumer surplus in equilibrium?
Assuming a continuous demand and supply curve, what is the total producer surplus in equilibrium?
What would happen to consumer and producer surplus if the government did not allow the price to go above 9?
Imagine now that the supply curve shifts right (i.e., down) by 5,
What would be the new equilibrium price and quantity?
In the most general of terms, what might cause such a shift?
To return to the original equilibrium price, by how much would the demand curve have to shift up or down? Would quantity change and if so by how much?
(TRUE or FALSE): Generally, if the demand and supply curves both shift to the right the equilibrium price will decrease and the quantity will increase. EXPLAIN YOUR REASONING.