SOLUTION: please help me solve this. Consider the market demand and the supply functions as Demand: P=500-25Q and Supply: P=50+20Q. i) Calculate the equilibrium price and Quantity [ 5

Algebra ->  Quadratic Equations and Parabolas -> SOLUTION: please help me solve this. Consider the market demand and the supply functions as Demand: P=500-25Q and Supply: P=50+20Q. i) Calculate the equilibrium price and Quantity [ 5       Log On


   

Question 1195938: please help me solve this.
Consider the market demand and the supply functions as Demand: P=500-25Q and Supply:
P=50+20Q.
i) Calculate the equilibrium price and Quantity [ 5 marks]
ii) Calculate the consumers’ and producers’ surplus [ 5 marks]
Answer by MathLover1(20849) About Me  (Show Source):
You can put this solution on YOUR website!

Demand: P=500-25Q
Supply: P=50%2B20Q

i) Calculate the equilibrium price and Quantity
An equilibrium price, also known as a market-clearing price, is the consumer cost assigned to some product or service such that supply and demand are equal, or close to equal.

500-25Q+=50%2B20Q
500-50+=25Q%2B20Q
450+=45Q+
Q+=450%2F45
Q+=highlight%2810%29+

so Quantity is 10
and the equilibrium price is
+P=500-25%2A10
P=500-250
P=+highlight%28250%29


ii) Calculate the consumers’ and producers’ surplus

Consumer Surplus:
Consumer Surplus= %28%28500.00+-+250.00%29+%2A+10.00%29+%2F+2
Consumer Surplus=highlight%281250.00%29

Producer Surplus:
Producer Surplus= %28%28250.00+-+50.00%29%2A+10.00%29+%2F+2
Producer Surplus=highlight%281000.00%29