A market has a supply curve that is given by: Qs =100-10p. Two types of consumers: Qdc = 90-4p, Qda= 70-16p. What is the equilibrium price?

Asked on by sany1983

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justaguide | College Teacher | (Level 2) Distinguished Educator

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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.

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