Purchase Solution

Equilbrium values for given linear demand/supply curves

Not what you're looking for?

Ask Custom Question

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.

Purchase this Solution

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.

Solution provided by:
Education
  • BEng (Hons) , Birla Institute of Technology and Science, India
  • MSc (Hons) , Birla Institute of Technology and Science, India
Recent Feedback
  • "Thank you"
  • "Really great step by step solution"
  • "I had tried another service before Brain Mass and they pale in comparison. This was perfect."
  • "Thanks Again! This is totally a great service!"
  • "Thank you so much for your help!"
Purchase this Solution


Free BrainMass Quizzes
Pricing Strategies

Discussion about various pricing techniques of profit-seeking firms.

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.

Basics of Economics

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

Economics, Basic Concepts, Demand-Supply-Equilibrium

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