1 Answer | Add Yours
In the question you have provided a supply curve and two demand curves for different categories of customers.
A supply curve in almost all cases is one that is upward sloping. This follows from the fact that as the price of a product goes up, the producers are willing to produce a larger quantity of the product as the profit made by them per unit goes up.
The equation you have given for the supply curve: Qs = 100 - 10p, is a downward sloping curve. As it can be seen, with an increase in price the quantity supplied decreases. This is not a characteristic of a supply curve, but rather is something displayed by the demand curve. With Qs = 100 - 10p, we see that the supply at a price of p = 0 is 100. This implies producers are willing to supply 100 units for free which is completely improbable.
Unless the correct supply equation is given, the equilibrium price cannot be calculated.
We’ve answered 317,393 questions. We can answer yours, too.Ask a question