Suppose the quantity demanded for a security is B_D = 150 ? 0.1b,
And the quantity supplied of the security is
B_S = 50 + 0.1b,
Where b is the price of the security in dollars.Suppose that the supply curve shifts to
B_S= 75 + 0.1b.
The equilibrium quantity of the security

Question

Quizplus · Accepted Answer

The original equilibrium is found where quantity demanded equals quantity supplied: $150 - 0.1b = 50 + 0.1b$. Solving this gives the original equilibrium price. With the supply curve shifting to $75 + 0.1b$, the new equilibrium is found by setting $150 - 0.1b = 75 + 0.1b$. Solving the new equation will show that the equilibrium quantity increases, and the specific increase can be calculated by comparing the quantities before and after the shift. The calculation shows an increase of 12.5 in the equilibrium quantity.

Suppose the Quantity Demanded for a Security Is BD =

Suppose the Quantity Demanded for a Security Is B_D =