Question

The market for good X is given by the equations below P=115−3Q P=10+2Q What happens in this market if the price of this good is $20 ? A. There is a shortage of 24.67 units B. There is a surplus of 26.67 units C. There is a surplus of 24.67 units D. There is a shortage of 26.67 units

Answer 1

At a price of $120, there would be a surplus of 55 2/3 units in the market for good X.

Step-by-step explanation:

To find the quantities demanded and supplied at a price of $120, we can substitute this price into the demand and supply equations and solve for Q:

Demand equation: P = 115 - 3Q

Supply equation: P = 10 + 2Q

Substituting P = 120 into both equations:

For the demand equation: 120 = 115 - 3Q

Solving for Q, we get: Q = -5/3

For the supply equation: 120 = 10 + 2Q

Solving for Q, we get: Q = 55

Since the quantity demanded (-5/3) is less than the quantity supplied (55), there would be a surplus in the market. The size of the surplus would be the difference between the quantity supplied and demanded: 55 - (-5/3) = 55 2/3.