Final answer:
The demand and supply functions for good X are Qd = 3000 – 2P and Qs = -600 + 2P. The equilibrium price and quantity can be found by setting Qd equal to Qs and solving for P. In this case, the equilibrium price is €1200 and the equilibrium quantity is 1800. At a market price of €1200, there is neither a shortage nor a surplus in the market.
Step-by-step explanation:
The demand and supply functions for good X are as follows: Qd = 3000 – 2P and Qs = -600 + 2P. To draw the demand and supply curve, we can plot the quantity on the horizontal axis and the price on the vertical axis. Using the equations, we can find the intercepts and slopes for the demand and supply curves. The demand curve has an intercept of 1500 and a slope of -2, while the supply curve has an intercept of -300 and a slope of 2.
The equilibrium price and quantity occur where the demand and supply curves intersect. To find the equilibrium price, we set Qd equal to Qs and solve for P. Substituting the equations, we get 3000 - 2P = -600 + 2P. Simplifying, we find P = €1200. The equilibrium quantity is then found by substituting this price back into either the demand or supply equation, giving us Q = 1800.
For part (b), we can determine if there is a shortage or surplus by comparing the market price to the equilibrium price. If the market price is higher than the equilibrium price, there is a surplus. If the market price is lower than the equilibrium price, there is a shortage. In this case, with a market price of €1200 (which is equal to the equilibrium price), there is neither a shortage nor a surplus in the market.