Purchase Solution

demand and supply curves

Not what you're looking for?

Ask Custom Question

I cannot seem to answer questions 2, 3 or 4. Please help (see attached file).

Attachments
Purchase this Solution
Solution Summary

The solution graphs the demand and supply curves and find equilibrium price and equilibrium quantity.

Solution Preview

Please refer to the attachment.

(2) Consider the market for commodity X described by the demand and supply equations below
Qd = 5 + 2P
Qs = -10 + 5P.
(a) Briefly comment on the behavior of economic agents in this market.

Since the slope of the demand function is positive (i.e., 2), the quantity demanded will be increase when the price of the product rises. Therefore, commodity X is a Giffen (inferior) good.

(b) Graph the demand and supply curves and find equilibrium price and equilibrium quantity.
Rewrite the demand and supply into:
P = - 2.5 + 0.5Qd
P = 2 + 0.2Qs

P
D
P'
P* S

Q
Q* Q'

At the equilibrium, Qd = Qs
Then 5+2P = -10+5P
15 = 3P
P = 5
Substitute into demand: Q = 5+2*5 = 15

(c) Determine the stability of this market in both the Wakwian and Marshallian sense.

In Marshall, the variable that adjusts is quantity, and the demand and supply price are related to the quantities. It is the quantity that changes to reach equilibrium

However, Walras saw price as the variable ...

Purchase this Solution
Free BrainMass Quizzes
Pricing Strategies

Discussion about various pricing techniques of profit-seeking firms.

Basics of Economics

Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.

Economic Issues and Concepts

This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.

Elementary Microeconomics

This quiz reviews the basic concept of supply and demand analysis.

Economics, Basic Concepts, Demand-Supply-Equilibrium

The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.

View More Free Quizzes
Related BrainMass Solutions

  • horizontal sum of competitor MC curves

    254391 Horizontal Sum of Competitor MC Curves Graphically, competitive market supply is measured by the vertical difference of competitor demand curves. vertical sum of competitor demand curves.

  • Supply and Demand (Price) Curves

    210902 Supply and Demand (Price) Curves Please find and answer the question attached. D. The intersect of supply and demand (Price) curves: When P = 40, Qd = Qs = 2; When P = 80, Qd = Qs = 4.

  • Concept of equilibrium when dealing with quantity and price

    Supply and demand curves shows how the quantity demanded or supplied changes in response to a change in the price of that good. Demand curves slope downward, supply slope upward.

  • Supply and Demand Graphs: Watermelon Market

    Hint: There will be two demand curves and two supply curves, one set for winter and another set for summer. See the attached Excel sheet for the graph.

  • Simple ways to remember the shape of curves

    585557 Memory Tricks for Demand and Supply Curve Shapes/Elasticities How do you remember the shapes and elasticities of demand and supply curves in Microeconomics?

  • Supply and demand curves

    173524 Supply and demand curves. 1. Illustrate with supply and demand curves. A. The price of a good rises, causing the demand for another good to fall. B. A shift in supply causes the price of a good to fall.

  • Demand and Supply Curves explained in this solution

    Graph the demand and supply curves, and identify the equilibrium price and quantity.

  • Demand and Supply Curves - Luxury Sports Cars

    210929 Demand and Supply Curves - Luxury Sports Cars Please see the attachment to find the question pertaining to the demand and supply curves for the market for luxury sports cars. Please refer to the attachment.

  • Economic Production: Limiting the Number of Units

    How do black markets shift the supply and demand curves? What other determinants of supply or demand (book calls these "shifters") might cause a change in the supply and demand curves?

  • Supply and Demand

    This solution also shows a graph of supply and deman curves.

View More Related Solutions