Market Mechanism
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Q1
If qD = 300 – p and qS = 220 + p, then equilibrium quantity is:
Marks:1View AnswerAnswer:
260
Explanation:
qD = 300 – p, qS = 220 + p.
At equilibrium qD = qS
300 – p = 220 + p
300 – 220 = p + p
80 = 2 p
p =80 /2 = 40
qD = 300 – 40 = 260 =qS
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Q2
If qD = 100 – p and qS = 20 + p, then excess demand can be expressed as
Marks:1View AnswerAnswer:
ED = 80 – 2p
Explanation:
ED = 100 – p – (20 + p)
= 100 – 20 – 2p
= 80 – 2p
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Q3
If the expression for excess demand is ED = 280 – 2p and p = 40, then excess demand is
Marks:1View AnswerAnswer:
200
Explanation:
ED = 280 – 2p and p = 40,
ED = 280 – 2(40) = 200.
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Q4
If quantity demanded is qD = 300 – p and quantity supplied is qS = 20 + p, then excess supply is
Marks:1View AnswerAnswer:
ES = 2p –280
Explanation:
ES = 20 + p– (300 – p)
= 2p – 280.
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Q5
If the total output, q0 is 200 units and each firm is supplying, qf0 amount which is equal to 20 units at equilibrium price, the number of firm, n0 is equal to
Marks:1View AnswerAnswer:
10
Explanation:
n0 = q0 / qf0 =200/20 = 10.
