ECO402 Assignment Solution
Friday, October 29, 2010 Posted In Eco Edit ThisQuestion 1
Part A
Qd= 850-25P
Qs= 500+45p
To find equilibrium price
Qd=Qs
850-25p=500+45p
After solving the equation we have the value of P, which is equilibrium price.
Then put he value of p in any one of the equation of quantity then we have the equilibrium quantity Q.
Part B
For calculating elasticity of demand we have the formula…
Elasticity of demand = Ed = dQ/dP / Q/P
Derivative should b taken of demand function (Qd= 850-25P) with the respect to P
Ed is negative.
For calculating elasticity of supply we have the formula…
Elasticity of demand = Es = dQ/dP / Q/P
Derivative should b taken of supply function (Qs= 500+45p) with the respect to P
Es is positive.
Question 2
| q | TU | MU |
| 0 1 2 3 4 5 5 7 8 | 0 10 18 24 28 30 30 28 24 | -- |
Mu= dTU/dQ
;;;;;;;;;;;;;;;;;
QNO1
A:
QD=QS
QD=850-25P
QS=500+45P
WE KNOW QD=QS
SO
850-25P=500+45P
850-500=45P-25P
350=20P
P=350/20
=17.5
QS=500+45P
QS=500+45(17.5)
QS=500+787.5
QS=1287.5
AS WE KNOW QS=QD FOR EQULIBRIUM
SO it will be at 1287.5
............
A:
QD=QS
QD=850-25P
QS=500+45P
WE KNOW QD=QS
SO
850-25P=500+45P
850-500=45P-25P
350=20P
P=350/20
=17.5
QS=500+45P
QS=500+45(17.5)
QS=500+787.5
QS=1287.5
AS WE KNOW QS=QD FOR EQULIBRIUM
SO it will be at 1287.5
............
Qd=Qs
850-25p=500+45p
850-500=45p+25p
350=70p
p=350/70
p=5 ( equilibrium price)
Now,
Putting the value of P in eq 1, we will get the equilibrium quantity,
Q=500+45(5)
Q=500+225
Q=725 per bushel
;;;;;;;;;;;;;;;;;;;;;
850-25p=500+45p
850-500=45p+25p
350=70p
p=350/70
p=5 ( equilibrium price)
Now,
Putting the value of P in eq 1, we will get the equilibrium quantity,
Q=500+45(5)
Q=500+225
Q=725 per bushel
;;;;;;;;;;;;;;;;;;;;;
