Document1

Economics 111 2014-15 1

st
sem EXER 3: Demand and Supply
(Assign 2: Due July 2)

Name: ______________________________________ Section: D


Review: Calculating equilibrium points

Given: Demand curve P = 10 Q
Supply curve P = 1 + (Q/2)

Encircle or box your final answer.

1. Solve for the equilibrium price and quantity.
2. Express the same demand and supply function in the form Q = f (P). Solve
again for the equilibrium price and quantity.
3. Compute for the quantity demand and supply when prices P = 1 to P = 6.
Suppose bad weather reduces the supply by half. Compute for the new supply.

Price per unit Q
D
Q
S1
Q
S2

1
2
3
4
5
6

4. Graph the demand curve and the two supply curves. Label properly.

5. At the old market (equilibrium) price and the new supply curve, is there as
shortage or a surplus? ______________ How much? _____ units Show this in
your graph.
6. What will make the market adjust to clear the shortage or surplus?


7. Solve for the new equilibrium price and quantity. [Hint: Use your equations in
no.2]