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Sample Assignment on Microeconomics PDF

Added on - 08 Nov 2021

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Microeconomics
Supply
Demand
Price
Market Equilibrium
10.6
40.2
40.2
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1. Demand and Supply
In a market, demand and supply is illustrated with the help of two equations such as
Qd = 72 – 3P
Qs = -34 + 7P
Figure 1: Market Equilibrium
a.
The market equilibrium takes place at the intersection of the demand and the supply curve.
3
b. In equilibrium Qd is equal to Qs
As a result,
72 – 3p = -34 + 7P
-3p – 7p = -34 – 72
-10p = -106
10p = 106
P = 10.6
Hence, the equilibrium price will be 10.6. However, the equilibrium quantity will be
Qd = Qs = 72 – 3P = 72 – 3(10.6) = 72 – 31.8
40.2 = Q
c. The consumer surplus is defined as the measurement to compute the surplus that the customers
are eager to pay for a commodity as opposed to its market price (Cowan, 2012). On the other
hand, producer surplus is a difference between the amounts that a supplier desires to supply as
compared to the amount he receives while trading (Hofmann and Oldehaver, 2016). In this case,
the market price is equal to the equilibrium price at 10.6.
Consumer Surplus = ½ * (40.2 – 10.6) * 100
½ * 29.6 * 100
1480
Producer Surplus = ½ * (40.2 – 10.6) * 100
½ * 29.6 * 100
1480
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