1. The market demand and market supply functions for a...

1. The market demand and market supply functions for a product are given by the following equations. $Q^D = 100 - 3P$ $Q^S = 10 + 2P$ Where, $Q^D$ is the quantity demanded, $Q^S$ is the quantity supplied and P is the price of the product a) Does the market exhibit an excess demand or excess supply at the prices 10 and 20? Explain. (1 mark) b) Draw the market demand and market supply curves for the product on a diagram (1 mark) c) What are the equilibrium price and equilibrium quantity of the product? (1 mark)

Transcript

00:01 Market and demand and market supply functions below.

00:04 And we're accused of d is the demand and q of s is the supply and p is the price.

00:13 So we want to know does the market exhibit excessive demand or excessive supply at prices of 10 and 20.

00:20 So let's see what that happens for prices equals 10 and the price equals 20.

00:26 So when i put 10 in place of p, which is what i'm going to do, i'm going to get 100 minus 30, which would be 70.

00:34 I'm going to get 10 plus 20, which is going to be 50.

00:37 When i put 20 in place of this, i'll get 100 minus 60, which is 40, and 10 plus 40, which is 50.

00:47 So in this case, since demand is higher, we have an excess of demand.

00:54 In this case, since we have supply higher, we have an excess of supply.

01:00 So now we want to look and see, we want to draw a market demand and supply curve for the product on a diagram.

01:07 I don't see a diagram here, but i'm just going to go ahead and grab these.

01:11 So when i look at these here, i've got my ordered pairs.

01:15 I can see this is going to, they're both linear.

01:17 So now my y intercept here is 100.

01:19 So i'm going to put that as 100.

01:21 And my y intercept here is 10.

01:23 So i'm going to put that as 10.

01:24 So now we can come over here and just use the ordered pairs we got for 10.

01:30 Or 20.

01:31 I'm going to use 10...

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