Question

Before the COVID-19 pandemic, in the City of Berkeley, the market demand of N-95 masks used to be = 1000 − 200PP, and the market supply used to be = 200PP − 200.

Calculate the equilibrium price and quantity before the pandemic. Illustrate your answers in a graph.

Answer 1

The equilibrium price before the COVID-19 pandemic was $3 and the equilibrium quantity was 400 masks. The demand and supply equations were set equal to each other to find the equilibrium point. A graph can be used to illustrate the equilibrium point where the demand and supply curves intersect.

Step-by-step explanation:

To find the equilibrium price and quantity before the COVID-19 pandemic, we need to set the market demand and supply equations equal to each other and solve for the price and quantity.

Market Demand: Qd = 1000 - 200P
Market Supply: Qs = 200P - 200

Setting Qd = Qs, we get:
1000 - 200P = 200P - 200

Simplifying the equation, we find:
400P = 1200

Dividing both sides by 400, we get:
P = 3

Substituting the price back into the demand or supply equation, we can find the quantity.
Qd = 1000 - 200(3) = 400
Qs = 200(3) - 200 = 400

Therefore, the equilibrium price before the pandemic was $3 and the equilibrium quantity was 400 masks.

To illustrate the equilibrium point on a graph, we plot the demand and supply curves. The x-axis represents the quantity and the y-axis represents the price. The demand curve is downward sloping, while the supply curve is upward sloping. The equilibrium point is where the two curves intersect. In this case, the equilibrium quantity is 400 masks and the equilibrium price is $3.