Solve Qd = Qs? Surely this will get you started.
I'm having trouble to calculate the following problems. if any one can, please help!!!
" The Market for good X is perfectly competitive. the demand and supply functions of good X are given as follows:
Qd= 6000 - 30P
Qs= -500 +20 P
Where Qd is quantity demanded in thousands units, Qs is quantity supplied in thousands units, and P is the price in dollars for good X. All firms in the market are identical. The market is in long-run equilibrium and there are 1,000 firms producing good X under thsi initial long-run equilibrium.
a) What are the equilibrium market price and market quantity for good X?
b) what is the out put of each firm in the initial long-run equilibrium?
Now suppose the government gives an $8 per-unit subsidy to the consumers for each unit of good X consumed.
c) after the provision of the per-unit subsidy to the consumers, what are the short-run equilibrium market price and market quantity for good X?
d) Out of the $8 per-unit subsidy to the consumers, what are the short-run equilibrium market price and market quantity for good X?
e) What are the long-run equilibrium market price and market quantity for good X?
f) Out of the $8 per-unit subsidy of good X, how much is the share received by the consumers in the long run?
g) Explain whether the number of firms in the new long-run equilibrium is larger or smaller than 1,000 and whether the new long-run equilibrium market output is larger or smaller than the initial level. "
Ya.. i got the part a & b, but now, when the government gives an $8 per-unit subsidy, which mean the demand curve will shift right, thus the equilibrium price & demand will increase. but How much??? don't know how to calculate it.. with the given info...
I don't think it works that way....
casue government provide subsidy to consumer.. more consumer will demand for the product X .. that there will be increase in demand. if the demand increase the price will go up as well as the supply will go up.....
increase in both demand & supply & price...
Hi,, here is what i got...
At equilibrium, Qd=Qs
$8 per-unit subsidy to consumers D move to Dí but the supply curve remain unchange
We need to find the equation of the new demand curve ( Dí)
Qd =2100= Y-30(138)
the equation for new demand cruve is Qd'=6240-30P
at equalibrium Qd'=Qs
Qd=Qs=Qe=2196*1000= 2,196,000 units
Plz refer to the graph...