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    ECO401 Assignmnet Solution

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    The document provides an economics assignment on supply and demand of coffee. It includes 4 questions: 1) Calculate demand and supply at a price of Rs. 8 and determine if there is a surplus or shortage. 2) Find the equilibrium price using the demand and supply equations. 3) Prove that the price found is the equilibrium. 4) Show the equilibrium graphically. The answers provide the calculations and graphs to show that at a price of Rs. 10, demand and supply are equal, proving it is the equilibrium price.

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    ECO401 Assignmnet Solution

    Uploaded by

    cs619finalproject.com
    1K views4 pages
    The document provides an economics assignment on supply and demand of coffee. It includes 4 questions: 1) Calculate demand and supply at a price of Rs. 8 and determine if there is a surplus or shortage. 2) Find the equilibrium price using the demand and supply equations. 3) Prove that the price found is the equilibrium. 4) Show the equilibrium graphically. The answers provide the calculations and graphs to show that at a price of Rs. 10, demand and supply are equal, proving it is the equilibrium price.

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    ECO401 Assignmnet Solution

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    The document provides an economics assignment on supply and demand of coffee. It includes 4 questions: 1) Calculate demand and supply at a price of Rs. 8 and determine if there is a surplus or shortage. 2) Find the equilibrium price using the demand and supply equations. 3) Prove that the price found is the equilibrium. 4) Show the equilibrium graphically. The answers provide the calculations and graphs to show that at a price of Rs. 10, demand and supply are equal, proving it is the equilibrium price.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    1K views4 pages

    ECO401 Assignmnet Solution

    Uploaded by

    cs619finalproject.com
    The document provides an economics assignment on supply and demand of coffee. It includes 4 questions: 1) Calculate demand and supply at a price of Rs. 8 and determine if there is a surplus or shortage. 2) Find the equilibrium price using the demand and supply equations. 3) Prove that the price found is the equilibrium. 4) Show the equilibrium graphically. The answers provide the calculations and graphs to show that at a price of Rs. 10, demand and supply are equal, proving it is the equilibrium price.

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    Economics (ECO401)
    Assignment No.01
    Opening Date and Time October 26, 2010 At 12:01 A.M. (Mid-Night)
    Due Date and Time November 01, 2010 At 11:59 P.M. (Mid-Night)

    Don’t Copy/Paste. Just take idea.

    Qd = 850 – 15P
    Qs = 400 + 30P
    A. Find quantity demanded and quantity supplied when the price of coffee is
    Rs. 8. Is there a surplus or shortage in the production of coffee? What
    should happen to the price of coffee?
    B. Find the equilibrium price for coffee by using given demand and supply
    equations.
    C. Prove that the price found in part (B) is an equilibrium price. D.
    Show the equilibrium condition in coffee market graphically.
    Marks: A = 6(4+1+1), B = 2, C = 3, D = 4

    Ans. A.

    Qd = 850 – 15 p Qd

    = 850 – 15(8) Qd =

    730

    Now we calculate Qs?

    Qs = 400 + 30 p

    Qs = 400 + 30(8)

    Qs. = 400 + 240

    Qs = 640

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    Quantity Demanded = 730 Quantity supplied = 640

    Demand is more than supply. It means there is shortage prevails.


    Rs. 8 is not equilibrium price as here qd is not equal to qs.

    There is shortage, so the shortage will push price to increase.

    Ans. B.

    Qd = 850 – 15P
    Qs = 400 + 30P

    As we know, at equilibrium price, QD is equal to QS.

    So,
    850 – 15p = 400 + 30 p

    850 – 400 = 30p + 15 p

    450 = 45p

    dividing both the sides by 45

    10 = p

    so the equilibrium price = 10 where demand is equal to supply.

    Ans. C.

    Prove:-

    Qd = 850 – 15P
    Qs = 400 + 30P

    By putting price = 10 into both the equations.

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    Qd = 850 – 15(10)
    Qd = 700

    Qs = 400 + 30(10)
    Qs = 700

    We can see that at p= 10, QD = QS. No shortage or surplus exists. So, it is proved.

    Graphically
    According to the equations, supposing different
    prices
    Qd = 850 – 15P
    Qs = 400 + 30P

    Demand Quantity Supply


    Demanded
    5 775 550
    6 760 580
    7 745 610
    8 730 640
    9 715 670
    10 700 700
    11 685 730
    12 670 760
    13 655 790
    14 640 820
    15 625 850

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    900
    800
    700
    600
    500 Demand
    400 Supply
    300
    200
    100
    0

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