Question

6. Demand, Supply, consumer surplus and Market Equilibrium. The following relations describe monthly demand and supply conditions in the metropolitan area for recyclable aluminum QD = 317,500 - 10,000P (Demand) Qs = -2,500 + 10,000P (Supply) where Q is quantity measured in pounds of scrap aluminum and P is price in dollars. Complete the following table: A Calculate the market equilibrium price and output? B. What is the inverse demand curve P = f(QD)? C. Compute the consumer surplus at the equilibrium price, D What is the inverse supply curve P= (Q)? E Compute the producer surplus at the equilibrium price.

Answer 1

In market equilibrium S = Qo 317500 -10,000 P --2500 + 10,000P 3) 20,000 P = 3,2, 07000 - l = $16 Bo = 317,500-10,000 ? when P=16 3D: 317500 - 1,60,000 So= 157 500 units Equilibrium Equilibrium price - 16. quantity = 157,500

В Оицим обемало шаблоны is the demand function и ілімд 4 "Р ИС S) : 357, 50% -10, 00 Р 5-10, EDP : Sp- 317 Som — P. 31.75 - 0. 000 1 &

ç maxime price Price when p=0 0 = 317,500 -10,000 p sorg - P - $31075 Consumer nuplus = 1/x Demand quantity at Equitilmin X (Max price willing to Pay - Market Price) = 12 x 157500x (31.75-16) = $12,46,312.50

D. Ineene supply function is the supply function и (или) об Р Os = -2500 + 10,000 P 7 - 010,000 p = $s + 2500 - P = 0.00019s + 0.25

I when &s=0 BP = $0.25 (punious, question) Producers Surplus = /₂ x Supply quantity at Equiliterium X (Market price - Least price willing to all at) = 1/2 x 157500X (16-0.25) 1 = $ 1240312.50