Market Mechanism

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  • Q1

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

    Marks:1
    Answer:

    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:1
    Answer:

    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:1
    Answer:

    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:1
    Answer:

    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:1
    Answer:

    10

    Explanation:

    n0 = q0 / qf0 =200/20 = 10.

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