ECON 361 - Practice Problem -  Demand and Supply Analysis

Suppose (for your product):

Q_d = 200 - 3P - 10I, and

Q_s = -10 + 6P - 5W

a.  If W = 25, I =3, what are market clearing values of P and Q?

Market Clearing Price =

Quantity demanded =

Quantity supplied =                   

b.  Graph this putting these numbers on your graph:

c.  What if the price were $25 instead - what would Qd and Qs be?

Q demanded =

Q supplied =

d. Graph and explain what is happening in this market.

Answers:

a.  Market clearing price = $33.88

Qd = 68.36

Qs = 68.28

b.

c. Qd = 95

Qs = 15

d.  There would be shortage of 80 units.