The change in demand has led to an increase in both the equilibrium price and the equilibrium quantity.
What is the effect with the demand change?
To compute the effect of the change in demand, we can start by equating the new demand function Qd = 640 - 8p to the original supply function Qs = 60 + 12p.
640 - 8p = 60 + 12p
640 - 60 = 8p + 12p
580 = 20p
p = 580 / 20
p = 29
The new equilibrium quantity (Qs) using the original supply function.
Qs = 60 + 12p
Qs = 60 + 12 * 29
Qs = 60 + 348
Qs = 408
Therefore, the change in demand has led to an increase in both the equilibrium price (from 25 to 29) and the equilibrium quantity (from 300 to 408).
The full question is:
Given the supply and demand function as Qd = 400-8p and Qs = 60 + 12p and suppose that the demand function changes to Qd = 640-8p, then. Show effect of change in demand.