Question

Given below are the Demand and Supply functions for consumers and suppliers. Supply function: Qs=P Demand function: Qd=60−5p test section called exam 1 written question.

1. Graph the equations (make sure to label the graphs appropriately and clearly)
2. Find the equilibrium price and quantity
3. Calculate the Consumer and Producer surplus for consumers and producers discuss how it might change.

Answer 1

To graph the demand and supply functions, solve the equations for P and plot the lines on a graph with P on the vertical axis. The equilibrium price is $2 and the equilibrium quantity is 12. Consumer and producer surplus can be calculated and may change with shifts in the curves.

Step-by-step explanation:

To graph the demand and supply functions, we can solve the equations for P (price) and plot the resulting lines on a graph with P on the vertical axis.

The demand curve equation is P = 8 - 0.5Qd, where Qd is the quantity demanded by consumers.

The supply curve equation is P = -0.4 + 0.2Qs, where Qs is the quantity supplied by suppliers.

By plotting these two lines and finding their point of intersection, we can determine the equilibrium price and quantity. In this case, the equilibrium price is $2 and the equilibrium quantity is 12.

Consumer surplus can be calculated by finding the area between the demand curve and the equilibrium price, and the producer surplus can be calculated by finding the area between the supply curve and the equilibrium price. The change in consumer and producer surplus could be affected by shifts in the demand or supply curves.