If the perfectly competitive market supply of pork bellies shifts from Q_S_,93 = 250 + 50P to Q_S_,94 = 400 + 40P,and the market demand is given by Q_D = +10,000 - 200P,then the change in equilibrium quantity will be:

Question

Quizplus · Accepted Answer

To find the change in equilibrium quantity, we need to first find the initial equilibrium point by setting supply equal to demand:
250 + 50P = 10,000 - 200P
250P = 9,750
P = 39
Q = 250 + 50(39) = 2,060
So initially, the equilibrium quantity is 2,060.

Now we need to find the new equilibrium point using the new supply equation:
400 + 40P = 10,000 - 200P
240P = 9,600
P = 40
Q = 400 + 40(40) = 1,800
So the new equilibrium quantity is 1,800.

The change in equilibrium quantity is therefore:
1,800 - 2,060 = -260
This means that the equilibrium quantity has decreased by 260 units. However, the answer choices only give options in increments of 100, so we choose the closest option, which is E: -200 units.

If the Perfectly Competitive Market Supply of Pork Bellies Shifts