**Demand and Supply Analysis**In this exercise, we explore the demand and supply equations given below:**Demand Equation**: $ P = 100 - Q_d $**Supply Equation**: $ P = 10 + 2Q_d $**Tasks:**a. **Find Equilibrium Price and Quantity**: To determine equilibrium, set the demand equation equal to the supply equation and solve for $ Q_d $ and $ P $.b. **Effect of a Price Ceiling at $ P = 60 $**: Analyze how setting a maximum allowable price at 60 affects the market equilibrium.c. **Effect of a Price Floor at $ P = 60 $**: Evaluate the market implications if the minimum allowable price is set at 60.d. **Effect of a Price Ceiling at $ P = 80 $**: Investigate the effects on the market if a price ceiling is established at 80.e. **Effect of a Price Floor at $ P = 80 $**: Consider what happens when a price floor is imposed at 80.f. **Diagram Showing Solutions**: Draw a graph illustrating the equilibrium found in part (a) and analyze the effects of price controls discussed in parts (b) and (e). Be sure to label the axes, curves, equilibrium point, and any shifts due to price ceilings or floors.

Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the question and specify the other subparts (up to 3) you’d like answered Answer: Given: Demand function: P=100-Qd Supply function: P=10+2Qd Calculation: (a). The equilibrium point is the point where the quantity demanded is equal to the quantity supplied. At equilibrium, Quantity demanded=Quantity supplied100-Qd=10+2Qd100-10=2Qd+Qd90=3QdQd=30To find the equilibrium price, substitute the value f Qd in any equation:P=100-QdP=100-30P=70 The equilibrium price is $70 and the equilibrium quantity is 30. (b). Price ceiling: it is the maximum price set by the government above which no producer can charge. Here, the price ceiling is $60 but the equilibrium price is $70. In this case, the price ceiling is binding and the producers will reduce their price to $60. As a result, quantity supply will fall and quantity demanded will increase. Quantity supply will be: 60=10+2QdQd=502=25 Quantity demanded will be: 60=100-QdQd=40 After the price ceiling, the quantity demanded will increase to 40 and the quantity supply will decrease to 25. There will be an excess demand of 15 units (40-25).(c). Price floor: it refers to the minimum price set by the government below which no producer can charge. Here, the price floor is $60 but the equilibrium price is $70. In this case, the price floor is not binding because producers are already charging above the price floor and they do not need to change the price. As a result, the price will not change and the quantity supply and quantity demanded will remain the same.

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Economics

3 Suppose demand and supply are given by: P = 100 – Qa P = 10 + 2Qd a. Find equilibrium price and quantity. b. What is the effect of a price ceiling set at P=60? c. What is the effect of a price floor set at P=60? d. What is the effect of a price ceiling set at P=80? e. What is the effect of a price floor set at P=80? f. Draw a diagram showing your answers in a, b, and e.

3 Suppose demand and supply are given by: P = 100 – Qa P = 10 + 2Qd a. Find equilibrium price and quantity. b. What is the effect of a price ceiling set at P=60? c. What is the effect of a price floor set at P=60? d. What is the effect of a price ceiling set at P=80? e. What is the effect of a price floor set at P=80? f. Draw a diagram showing your answers in a, b, and e.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

**Demand and Supply Analysis**

In this exercise, we explore the demand and supply equations given below:

**Demand Equation**: $ P = 100 - Q_d $

**Supply Equation**: $ P = 10 + 2Q_d $

**Tasks:**

a. **Find Equilibrium Price and Quantity**:
To determine equilibrium, set the demand equation equal to the supply equation and solve for $ Q_d $ and $ P $.

b. **Effect of a Price Ceiling at $ P = 60 $**:
Analyze how setting a maximum allowable price at 60 affects the market equilibrium.

c. **Effect of a Price Floor at $ P = 60 $**:
Evaluate the market implications if the minimum allowable price is set at 60.

d. **Effect of a Price Ceiling at $ P = 80 $**:
Investigate the effects on the market if a price ceiling is established at 80.

e. **Effect of a Price Floor at $ P = 80 $**:
Consider what happens when a price floor is imposed at 80.

f. **Diagram Showing Solutions**:
Draw a graph illustrating the equilibrium found in part (a) and analyze the effects of price controls discussed in parts (b) and (e). Be sure to label the axes, curves, equilibrium point, and any shifts due to price ceilings or floors.

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