5. Consider the market for Good X.

a. Suppose that consumers do not buy any of Good X at the price of $120, and for every $10
decrease in price, the quantity consumed increases by 20. Write the equation for the demand
curve of Good X.
b. Suppose that producers do not produce any of Good X at the price of $50, and for every $10
increase in price, the producers increase the quantity produced by 30. Write the equation for
the supply curve of Good X.
c. Find the equilibrium price and quantity.
d. At what price does this market have a shortage of 40?
e. At what price does this market have a surplus of 60?

5.
a. QD = 240 – 2P
b. QS = –150 + 3P

c. For the equilibrium price:

QD = QS
240 – 2P = –150 + 3P
5P = 390
P = 78.

For the equilibrium quantity:

Q = 240 – 2P
= 240 – 2(78)
= 84

d. QD – QS = 40
(240 – 2P) – (–150 + 3P) = 40
240 – 2P +150 – 3P = 40
240 + 150 – 40 = 5P
5P = 350
P = 70

e. QS – QD = 60
(–150 + 3P) – (240 – 2P) = 60
–150 + 3P – 240 + 2P = 60
5P = 60 + 390
5P = 450
P = 90.