Share
Explore BrainMass

Demand and Supply Curves

The demand and supply curves for T-shirts in LA, Ca, are given by the following equations:

Q= 24,000 - 500P Q= 6,000 + 1,000P

where P is measured in $ and Q is the number of T-shirts sold per year.

a. Find the equilibrium price and quantity algebraically.

b. If the tourists decide they do not really like T-shirts that much, which of the following might be the new demand curve?

Q=21,000 - 500P Q=27,000 - 500P

Find the equilibrium price and quantity after the shift of the demand curve.

c. If, instead, 2 new stores that sell T-shirts open up in town, which of the following might be the new supply curve?

Q=4,000 + 1,000P Q=9,000 + 1,000P

Find the equilibrium price and quantity after the shift of the supply curve.

In addition,

Assume both b. and c. happen causing both the demand and supply curves to shift. Find the new equilibrium price and quantity after both shifts

Solution Preview

Dear Student,

a. Equilibrium price.

Demand Curve is= 24000 - 500P and supply Curve is Q= 6000 +1000P that means using simple algebraic equations, 1500P = 18000. That means P= 12.The equilibrium price = 12. And quantity = 24000-500*12 = 18000. So equilibrium price = 12 and quantity = 18,000/-.

b. the demand will ...

Solution Summary

The solution answers the question below.

$2.19