·て 2. (13 points) Consider the following demand and supply functions: Qd=20-2p and Q-4t2P a. Find...

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Answer 1

Answer #1

a). Solution :- At an equilibrium, Demand = Supply.

20 - 2P = (-) 4 + 2P

20 + 4 = 2P + 2P

24 = 4P

P = 24 / 4

P = $ 6.

Q = 20 - 2 * 6 (Put the value of P = 6 in the demand equation).

Q = 20 - 12

Q = 8 units.

Conclusion :-

Equilibrium price (P)	$ 6.
Equilibrium quantity (Q)	8 units.

b). Solution :- Consumer surplus = 0.50 * Base * Height.

= 0.50 * (10 - 6) * (8 - 0)

= 0.50 * 4 * 8

= $ 16.

Producer surplus = 0.50 * Base * Height.

= 0.50 * (6 - 2) * (8 - 0)

= 0.50 * 4 * 8

= $ 16.

Conclusion :-

Consumer surplus	$ 16.
Producer surplus	$ 16.

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