Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
Q: the following relations describe monthly demand and supply for a computer support service catering to small businesses: Qd=3,000 -(minus)10 P Qs=1,000+ 10P where Q is the number of businesses that need services and P is the monthly fee, in dollars. a) At what average monthly fee would demand equal zero? $300 b)at what average monthly fee would supply equal zero? Qs = 1,000 + 10p 0 = 1,000 + 10p 10p = -1,000 p = -$100 Supply would never equal 0 c)Plot the supply and demand curves. Please see the attached excel sheet Supply & Demand 8,000 4,000 Quantity Demanded Quantity Supplied 2,000 0 $0 (2,000) $5 0 $1 00 $1 50 $2 00 $2 50 $3 00 $3 50 $4 00 $4 50 $5 00 Quantity 6,000 (4,000) Price d)What is the equilibrium price/output level? Price = $100 Quantity = 2,000 e)suppose demand increases and leads to a new demand curve: Qd=3,500 -(minus)10P what is the effect on supply? What are the new equilibrium P and Q? No effect on Supply. Qd = 3,500 – 10p Qs = 1,000 + 10p At Equilibrium: 3,500 – 10p = 1,000 + 10p 2,500 = 20p P = $125 Qd = 3,500 – 10(125) = 3,500 – 1,250 = 2,250 New Equilibrium Price = $125 New Equilibrium Quantity = 2,250 f)Suppose new suppliers enter the market due to the increase in demand so the new supply curve is Q= -(minus)500 + 10P. What are the new equilibrium price and equilibrium quantity? Qs = -500 + 10p QD = 3,500 – 10p -500 + 10p = 3,500 -10p 4,000 = 20p P = $200 Q = -500 + 10($200) = -500 + 2,000 = 1,500 G) Show these changes on the graph. Supply & Demand 4,000 Quantity Demanded Quantity Supplied QD (2) QS (2) 2,000 1,000 (1,000) $2 5 $5 0 $7 5 $1 00 $1 25 $1 50 $1 75 $2 00 $2 25 $2 50 0 $0 Quantity 3,000 Price