SOLUTION: If the demand and supply functions of a good are given as Qd = 250-3P Qs = 2P � 50 a Determine the price elasticity of demand and supply at equilibrium. b From the above inf

Question 1086429: If the demand and supply functions of a good are given as
Qd = 250-3P
Qs = 2P � 50
a Determine the price elasticity of demand and supply at equilibrium.
b From the above information, would there be shortage or surplus if government decides the market price to be 75 units? How much will it be?

Answer by Boreal(15235) (Show Source): You can put this solution on YOUR website!
Set them equal to each other
250-3P=2P-50
300=5P
P=60 at equilibrium
If the market price were 75 units
Qd=250-225=25
Qs=150-50=100
Lot of supply, not much demand. Surplus of 75 units.
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