Market Mechanism
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Q1
If q^{D} = 300 – p and q^{S} = 220 + p, then equilibrium quantity is:
Marks:1Answer:
260
Explanation:
q^{D} = 300 – p, q^{S} = 220 + p.
At equilibrium q^{D }= q^{S}
300 – p = 220 + p
300 – 220 = p + p
80 = 2 p
p =80 /2 = 40
q^{D} = 300 – 40 = 260 =q^{S}

Q2
If q^{D} = 100 – p and q^{S} = 20 + p, then excess demand can be expressed as
Marks:1Answer:
ED = 80 – 2p
Explanation:
ED = 100 – p – (20 + p)
= 100 – 20 – 2p
= 80 – 2p

Q3
If the expression for excess demand is ED = 280 – 2p and p = 40, then excess demand is
Marks:1Answer:
200
Explanation:
ED = 280 – 2p and p = 40,
ED = 280 – 2(40) = 200.

Q4
If quantity demanded is q^{D} = 300 – p and quantity supplied is q^{S} = 20 + p, then excess supply is
Marks:1Answer:
ES = 2p –280
Explanation:
ES = 20 + p– (300 – p)
= 2p – 280.

Q5
If the total output, q_{0}_{ }is 200 units and each firm is supplying, q^{f}_{0}_{ }amount which is equal to 20 units at equilibrium price, the number of firm, n_{0} is equal to
Marks:1Answer:
10
Explanation:
n_{0}_{ }= q_{0} / q^{f}_{0 }=200/20 = 10.