Demand for a product is given by Q = 200

Question

Demand for a product is given by Q = 200 - P and supply is given by Q = 0.5P - 10.If the quantity demanded rises by 10 units at every possible price,then the equilibrium quantity will be

Quizplus · Accepted Answer

At equilibrium, the quantity demanded equals the quantity supplied, so Q = Q. We can set the demand and supply equations equal to each other and solve for P:

200 - P = 0.5P - 10

Simplifying this equation, we get:

1.5P = 210

P = 140

Now we can use either the demand or supply equation to find the equilibrium quantity:

Q = 200 - P

Q = 200 - 140

Q = 60

Therefore, the equilibrium quantity will be 60 units. Since the demand curve has shifted upwards by 10 units at every possible price, the new demand curve will be Q = 210 - P. If we set this equal to the supply equation, we get:

210 - P = 0.5P - 10

2.5P = 220

P = 88

Plugging this into the new demand equation, we get:

Q = 210 - 88

Q = 122

So the new equilibrium quantity is 122 units, which is an increase of 62 units from the original equilibrium quantity of 60 units.