Answers to Paper 3 we did not go over
1. A. Price Qd=100-2P Qs=-50+ 4P
0 100 -50
10 80 -10
20 60 30
30 40 70
40 20 110
b. Qd=Qs
100-2P= -50 + 4P
P=25
Substituting 25 for P equilibrium quantity is 50 and equilibrium price is 25
c. Welfare triangle looks like P=50 through P=12.5 out to equilibrium price and quantity
Find y intercept of demand curve by entering quantity as zero
Find y intercept of supply curve by entering quantity as zero
So consumer surplus is above equilibrium price and producer surplus is below
Consumer surplus 625
Producer surplus 312.50
d. Plug 20 into both equations and Qd=60 and Qs =30 so excess demand of 30 units
e. set price to zero so Qd =100
for supply function set Q to zero to see price to bring to market P= 12.5
f. demand function gets flatter and more responsive to changes in price and same with supply function
1. A. Price Qd=100-2P Qs=-50+ 4P
0 100 -50
10 80 -10
20 60 30
30 40 70
40 20 110
b. Qd=Qs
100-2P= -50 + 4P
P=25
Substituting 25 for P equilibrium quantity is 50 and equilibrium price is 25
c. Welfare triangle looks like P=50 through P=12.5 out to equilibrium price and quantity
Find y intercept of demand curve by entering quantity as zero
Find y intercept of supply curve by entering quantity as zero
So consumer surplus is above equilibrium price and producer surplus is below
Consumer surplus 625
Producer surplus 312.50
d. Plug 20 into both equations and Qd=60 and Qs =30 so excess demand of 30 units
e. set price to zero so Qd =100
for supply function set Q to zero to see price to bring to market P= 12.5
f. demand function gets flatter and more responsive to changes in price and same with supply function