Explore BrainMass

Explore BrainMass

    Equilbrium values for given linear demand/supply curves

    Not what you're looking for? Search our solutions OR ask your own Custom question.

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    The following relations describe monthly demand and supply for a computer support service catering to small businesses:

    Qd=3,000 -10 P
    Qs=-1,000+ 10P

    where Q is the number of businesses that need services and P is the monthly fee, in dollars.

    a) At what average monthly fee would demand equal zero?

    b) At what average monthly fee would supply equal zero?

    c) Plot the supply and demand curves.

    D) What is the equilibrium price/output level?

    e) Suppose demand increases and leads to a new demand curve:
    Qd=3,500 - 10P
    what is the effect on supply? What are the new equilibrium P and Q?

    f) Suppose new suppliers enter the market due to the increase in demand so the new supply curve is Q= -500 + 10P. What are the new equilibrium price and equilibrium quantity?

    G) Show these changes on the graph.

    © BrainMass Inc. brainmass.com March 4, 2021, 8:44 pm ad1c9bdddf
    https://brainmass.com/economics/demand-supply/equilbrium-values-for-given-linear-demand-supply-curves-191168

    Solution Summary

    Solution describes step by step process for determining equilbrium prices and quantities for a computer support business. It also explains mathematical approach to study the changes in demand/supply functions on equilbrium values. Soltions are attached in word document. Graphs are made to illustrate effect of changes in demand/supply functions on equilbrium positions.

    $2.49

    ADVERTISEMENT