Final answer:
The equilibrium price in this market is $18 and the equilibrium quantity exchanged is 36 units. The total revenue for the suppliers at the market equilibrium is $648. The net social surplus at the equilibrium is $324.
Step-by-step explanation:
To find the equilibrium price and quantity exchanged in the market, we need to set the demand equation equal to the supply equation:
Qs = QD
2P = 90 - 3P
5P = 90
P = 18
Substituting the equilibrium price back into either the demand or supply equation, we can find the equilibrium quantity:
Qs = 2(18)
Qs = 36
The equilibrium price in this market is $18 and the equilibrium quantity exchanged is 36 units.
For part b, the total revenue for the suppliers at the market equilibrium can be calculated by multiplying the equilibrium price by the equilibrium quantity:
Total Revenue = Price x Quantity
Total Revenue = 18 x 36
Total Revenue = $648
For part c, the net social surplus at the equilibrium can be calculated by finding the area between the demand and supply curves. In this case, the net social surplus is the triangle formed by the equilibrium price and quantity:
Net Social Surplus = 0.5 x (18) x (36)
Net Social Surplus = 0.5 x 18 x 36
Net Social Surplus = $324
For part 2a, to measure the horizontal shift in supply, we can compare the original and new supply curves. The original supply curve, Qs = 2P, starts at the vertical intercept of -0.4 and has a slope of 0.2. The new supply curve, Qs = 2(P - 15), starts at the vertical intercept of -0.4 and has a slope of 0.2 as well. The horizontal shift in supply is 15. The vertical shift in supply is -30, as shown by the difference in the vertical intercepts.
For part 2b, we can use the new supply curve, Qs = 2(P - 15), and set it equal to the demand equation, QD = 90 - 3P, to find the new equilibrium price and quantity:
2(P - 15) = 90 - 3P
5P = 120
P = 24
Substituting the new equilibrium price back into either the demand or supply equation, we can find the new equilibrium quantity:
Qs = 2(24 - 15)
Qs = 18
The new market equilibrium price is $24 and the new quantity exchanged is 18 units.
For part 2c, when comparing the new equilibrium price and quantity to the original equilibrium, we can see that the new price is higher and the new quantity is lower. The magnitude of the difference in price is less than 15 because the supply curve experienced a horizontal shift, meaning that even though the price increased, it didn't increase by the full amount of the shift because the demand and supply curves intersect at a lower price and quantity.