Use the following general linear demand relation to answer questions 9 through 13:

where M is income and is the price of a related good, R.
-If M = $15,000 and P_R = $20 and the supply function is Q= 30+3P, then, when the price of the good is $60,

Question

Use the following general linear demand relation to answer questions 9 through 13:

where M is income and

is the price of a related good, R.
-If M = $15,000 and P_R = $20 and the supply function is Q= 30+3P, then, when the price of the good is $60,

Quizplus · Accepted Answer

When the price of the good is $60, the supply function Q = 30 + 3P becomes Q = 30 + 3(60) = 30 + 180 = 210 units. Since the quantity supplied (210 units) exceeds the quantity demanded (150 units, as given by M = $15,000 and P_R = $20, implying a demand of 150 units at a price of $20), there is a surplus of 60 units (210 supplied - 150 demanded).

Use the Following General Linear Demand Relation to Answer Questions