ASSIGNMENT # 1

Economic Issues and Policies in Global Perspective

MBA (G)
Total marks=10

Announced Date: 3/3/2020 Submission date: 10/3/2020

Q#2 The demand and supply curves for T-shirts in Lahore are given by the
following equations:
Qd = 24,000 – 500P
Qs = 6,000 + 1,000P

Where P is the price in rupee and Q is the number T-shirts sold per year.

a. Find the equilibrium price and quantity.

b. If boys decide they do not really like T-shirts that much, which of the
following might be the new demand curve?

Qd= 21,00 – 500P Qd = 27,000 – 500p

And find the new equilibrium price and quantity

c. If instead, two new stores that sell T-shirts open up in town, which of the
following might be the new supply curve?

Qs = 3,000 + 1,000P Qs =9,000 + 1,000P

Find the new equilibrium price and quantity after the shift in the supply
curve.
(3)
Solution

a.
Qd=Qs

24,000 – 500P=6,000 + 1,000P

24000 – 500P – 6000 - 1000P
18000-1500P
P=18000/1500
P=12

Qd = 24,000 – 500(12)=18,000
Qs = 6,000 + 1,000(12)=18,000

b. Qd= 21,00 – 500P Qd = 27,000 – 500p

 Qd1= 21,00 – 500(12)= -3900
Qd2 = 27,000 – 500(12)= 21000
I think Qd2 will be new demand

Qd2=27000-500P
Qs=6000+1000P

27000-500P=6000+1000P
27000-500P-6000-1000P
P=21000/-1500= -14

Qd=27000-500(-14)= -20,000
Qs=6000+1000(-14)= -20,000

c. Qs = 3,000 + 1,000P Qs =9,000 + 1,000P

Qs1=3000+1000(14)=17000
Qs2=9000+1000(14)=23000

Qs1=3000+1000p
Qd=24,000 – 500P
24000-500p-3000-1000p
21000-1500p
P=21,000/1500
P=14

Qse=3000+1000(14)=17,000
Qde=24000-500(14)=17000