Price, Supply, and Demand Questions II

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In summary, the conversation discusses the equations for demand curves for a commodity and the corresponding choke price, slope, and price elasticities of demand near certain quantities. It also brings up the idea of market demand and supply, equilibrium price and quantity, and consumer and producer surplus in relation to cost curves and the number of firms in the market. The listener also raises a potential error in the second demand curve given.
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Fuzzyllama
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I need some help finishing a few problems on my assignment. Any help is appreciated

3. The followin equations represent demand curves for a commodity; q. A. q=100-p B. q=10+p C. q=50. What is choke price, slope and price elasticities of demand in the neighborhood of q=100 and q=50.

4. Assume market demand is created by P=120-6Q and P=60-30Q. Supply is created by 10 firms with cost curves of TC=q^2. What is market demand and supply? What is equilibrium price and quantity? How big is CS and PS?

Thanks in advance for any help!
 
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Fuzzyllama said:
3. The following equations represent demand curves for a commodity; q. A. q=100-p B. q=10+p C. q=50. What is choke price, slope and price elasticities of demand in the neighborhood of q=100 and q=50.

Hi Fuzzyllama, :)

I don't know much about economics and the mathematics associated with it, but I think that the second demand curve that you have given is incorrect. Except under special circumstances, demand curves should have a negative slope according to the law of demand. But the curve, \(q=10+p\) seem to have a positive slope. Is there a typo?

Kind Regards,
Sudharaka.
 

FAQ: Price, Supply, and Demand Questions II

What is the relationship between price and demand?

The relationship between price and demand is known as the law of demand. It states that as the price of a product or service increases, the quantity demanded decreases, and vice versa. This means that when the price is higher, consumers will be less likely to purchase the product or service, but when the price is lower, they will be more likely to buy it.

How does supply affect prices?

Supply and prices have an inverse relationship. When the supply of a product or service increases, the price tends to decrease, and when the supply decreases, the price tends to increase. This is because when there is more supply available, the market becomes more competitive, and businesses are forced to lower their prices to attract consumers. On the other hand, when there is a limited supply, businesses can charge higher prices as consumers are willing to pay more for a scarce product or service.

What factors can cause shifts in supply and demand?

Several factors can cause shifts in supply and demand, including changes in consumer preferences, changes in income levels, changes in the prices of related goods or services, and changes in production costs. These factors can affect the demand curve (shift it left or right) or the supply curve (shift it up or down), resulting in changes in prices and quantities.

How do prices reach equilibrium in a market?

In a market, prices reach equilibrium when the quantity demanded by consumers is equal to the quantity supplied by producers. This equilibrium price is also known as the market-clearing price. At this point, there is no shortage or surplus of the product or service, and the market is in balance. However, this equilibrium can shift if there are changes in supply or demand, resulting in a new equilibrium price and quantity.

Can government intervention affect prices, supply, and demand?

Yes, government intervention can affect prices, supply, and demand. For example, the government can impose taxes or subsidies on certain products, which can impact the prices that consumers pay. They can also regulate production and distribution, which can affect the supply of a product or service. Additionally, government policies can influence consumer behavior, leading to changes in demand for certain goods or services.

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