10.
Your futures portfolio business, Capital Assets: Into the past, has been steadily growing over the years. Many of your clients have investments in automobile-related commodities, with engines always remaining a concern. Quite often you obtain forecasts from the Economic Research Service (ERS) on market conditions for such items as car engines. They have provided their estimates of demand and supply curves for combustible engines below:
P = 300 – Qd Demand
P = 60 + 2Qs Supply,
where P = price of engines in the industry, Qd = quantity demanded for engines, and Qs = quantity supplied of engines. Choose the correct answer below on the equilibrium price and quantity of engines in the market. This information will help your business serve its clientele better with specific knowledge of pricing and production for combustible engines.
a)
a. Q* = 220 units ; P* = $80
b)
b. Q* = 2.5 units ; P* = $2.4
c)
c. Q* = 80 units ; P* = $220
d)
d. Q* = 300 units ; P* = $60
e)
e. Q* = 120 units ; P* = $180
f)
f. Q* = 360 units ; P* = $40
g)
g. Q* = 80 units ; P* = $300