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    Question

    In a competitive market for a specific financial

    commodity, the daily Demand and Supply functions are given as follows:  ·        Demand Function: Qd = 1,200 - 4P ·        Supply Function: Qs = -200+3P Where P is the price in ₹ and Q is the quantity in units. Calculate the Equilibrium Price (Pe) and the Equilibrium Quantity (Qe) for this market. 
    A Pe = Rs.200; Qe = 400 units Correct Answer Incorrect Answer
    B Pe = Rs.100; Qe = 200 units Correct Answer Incorrect Answer
    C Pe = Rs.140; Qe = 640 units Correct Answer Incorrect Answer
    D Pe = Rs.400; Qe = 200 units Correct Answer Incorrect Answer
    E Pe = Rs.200; Qe = 100 units Correct Answer Incorrect Answer

    Solution

    Under the equilibrium condition, Demand function = supply function As such, Qd = Qs 1,200 - 4P = -200+3P 7P = 1400 P = 200   With P = 200, using the demand function, Q = 1200 - 4x200 = 1200 – 800 = 400 units   Equilibrium Price (Pe)is Rs.200 and the Equilibrium Quantity (Qe) is 400 units.

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