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Question - The following schedules show the demand and supply for a product. a ...
Jun 19, 2024
Solution
a
Calculate Market Demand and Supply: - Market Demand: Sum of quantities demanded by Consumer X, Y, and Z at each price level. - Market Supply: Sum of quantities supplied by Producer A, B, and C at each price level. Priceamp;Market Demandamp;Market Supply10amp;40+40+60=140amp;20+20+20=6020amp;35+35+50=120amp;25+30+25=8030amp;30+30+40=100amp;30+40+30=10040amp;25+25+30=80amp;35+50+35=12050amp;20+20+20=60amp;40+60+40=14060amp;15+15+10=40amp;45+70+45=16070amp;10+10+0=20amp;50+80+50=18080amp;0+0+0=0amp;55+90+55=200 \begin{array}{|c|c|c|} \hline \text{Price} & \text{Market Demand} & \text{Market Supply} \\ \hline 10 & 40 + 40 + 60 = 140 & 20 + 20 + 20 = 60 \\ 20 & 35 + 35 + 50 = 120 & 25 + 30 + 25 = 80 \\ 30 & 30 + 30 + 40 = 100 & 30 + 40 + 30 = 100 \\ 40 & 25 + 25 + 30 = 80 & 35 + 50 + 35 = 120 \\ 50 & 20 + 20 + 20 = 60 & 40 + 60 + 40 = 140 \\ 60 & 15 + 15 + 10 = 40 & 45 + 70 + 45 = 160 \\ 70 & 10 + 10 + 0 = 20 & 50 + 80 + 50 = 180 \\ 80 & 0 + 0 + 0 = 0 & 55 + 90 + 55 = 200 \\ \hline \end{array}
b
Plot Market Demand and Supply, Determine Equilibrium: - Plot the data points for market demand and supply on a graph. - Equilibrium Price and Quantity: Intersection point of demand and supply curves. Equilibrium Price=30,Equilibrium Quantity=100 \text{Equilibrium Price} = 30, \quad \text{Equilibrium Quantity} = 100
c
Quantity Demanded by Consumer X and Supplied by Producer C at Equilibrium: - At equilibrium price of 30: Quantity Demanded by Consumer X=30 \text{Quantity Demanded by Consumer X} = 30 Quantity Supplied by Producer C=30 \text{Quantity Supplied by Producer C} = 30
Answer
Equilibrium Price: 30, Equilibrium Quantity: 100, Quantity Demanded by Consumer X: 30, Quantity Supplied by Producer C: 30
Key Concept
Market Equilibrium
Explanation
The market equilibrium is the point where the quantity demanded equals the quantity supplied. At this point, there is no surplus or shortage in the market.
Solution
a
Surplus or Shortage at Price RM40: - At price RM40: Market Demand=80,Market Supply=120 \text{Market Demand} = 80, \quad \text{Market Supply} = 120 - Surplus: Market Supply - Market Demand Surplus=120−80=40 \text{Surplus} = 120 - 80 = 40
b
Calculate Consumer and Producer Surplus: - Consumer Surplus: Area between demand curve and price level up to equilibrium quantity. - Producer Surplus: Area between supply curve and price level up to equilibrium quantity. Consumer Surplus=12×(140−30)×100=5500 \text{Consumer Surplus} = \frac{1}{2} \times (140 - 30) \times 100 = 5500 Producer Surplus=12×(30−0)×100=1500 \text{Producer Surplus} = \frac{1}{2} \times (30 - 0) \times 100 = 1500
c
Total Surplus: - Total Surplus: Sum of consumer and producer surplus. Total Surplus=5500+1500=7000 \text{Total Surplus} = 5500 + 1500 = 7000
Answer
Surplus at RM40: 40 units, Consumer Surplus: 5500, Producer Surplus: 1500, Total Surplus: 7000
Key Concept
Surplus and Total Surplus
Explanation
Surplus occurs when market supply exceeds market demand at a given price. Total surplus is the sum of consumer and producer surplus, representing the total benefit to society.
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