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Suppose that the monthly demand function of a particular commodity is given by P= 200 -0.4x and the supply function is P = 0.2x + 80 where x is the number of units demanded and supplied and P is in pesos.

a.) Determine the equilibrium prics and quantity

b.) At a unit prices of P 140, by how many unit does supply exceed demand.

c.) At a unit prices of P 90, by how many unit does demand exceed supply.

d.) Graph the demand and supply equations in the same coordinate plane.

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a. Equilibrium price

supply function= demand function

.2x+80=200-.4x

0.2x+0.4x=200-80

0.6x=120

x=120/.6

x=200 units.

b. P=140

demand

140=200-.4x

.4x=200-140

.4x=60

x=60/.4=150

and supply

140=.2x+80

.2x=140-80

.2x=60

x=60/.2

x=300

supply exceed demand= 300-150=150 unit.

c. When P =90

demand

90=200-.4x

.4x=200-90

.4x=110

x=275

supply

90=.2x+80

.2x=10

x=50

demand exceed supply=275-50

=225 units

d. Graph

Red line repn. demand function and green line repn. supply function.

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