 # Market Mechanism

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• Q1

If qD = 300 – p and qS = 220 + p, then equilibrium quantity is:

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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

• Q2

If qD = 100 – p and qS = 20 + p, then excess demand can be expressed as

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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

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200

##### Explanation:

ED = 280 – 2p and p = 40,

ED = 280 – 2(40) = 200.

• Q4

If quantity demanded is qD = 300 – p and quantity supplied is qS = 20 + p, then excess supply is

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ES = 2p –280

##### Explanation:

ES = 20 + p– (300 – p)

= 2p – 280.

• 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

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