1. A competitive market has the demand schedule p = 610 − 3q and the supply schedule p = 20 + 2q....

Question

1. A competitive market has the demand schedule p = 610 − 3q and the supply schedule p = 20 + 2q. Calculate equilibrium price and quantity.

2. A competitive market has the demand schedule p = 610 − 3q and the supply schedule p = 50 + 4q where p is measured in pounds.

(a) Find the equilibrium values of p and q.

(b) What will happen to these values if the government imposes a tax of £14 per unit on q?

David · Accepted Answer

1. Demand schedule: p = 610 – 3q 
Supply schedule: p = 20 + 2q 
In equilibrium supply equals demand. 
610 – 3q = 20 + 2q 
5q = 590 
q = 590 / 5 = 118 
Equilibrium quantity = 118 units 
Substituting q in demand function: 
p = 610 – 3(118) 
p = 610 – 354 = 
Equilibrium price = $256. 
3. a.

1. A competitive market has the demand schedule p = 610 − 3q and the supply schedule p = 20 + 2q. Calculate equilibrium price and quantity. 2. A competitive market has the demand schedule p = 610 − 3q...

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