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Home Q & A Board Other Fields Homework Help Business Economics
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nakungth nakungth
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Posts: 1175
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6 years ago
The market for gravel has been estimated to have these supply and demand relationships:
   Supply  P = 10 + 0.01Q
   Demand  P = 100 - 0.01Q,

where P represents price per unit in dollars, and Q represents sales per week in tons.  Determine the equilibrium price and sales.  Determine the amount of shortage or surplus that would develop at P = $40/ton.
Textbook 
Microeconomics

Microeconomics


Edition: 8th
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#1
6 years ago
The equilibrium price can be found by equating S to D in terms of Q.
   10 + 0.01Q = 100 - 0.01Q
   0.02Q = 90
   Q = 4,500 tons/week
   P = 10 + 0.01(4,500) = $55/ton
At P = $40/ton, the quantity demanded is:
   40 = 100 - 0.01Q
   Q = 6,000 tons/week
The quantity supplied is:   
   40 = 10 + 0.01Q
   Q = 3,000 tons/week
The shortage is 3,000 tons/week.
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