Question

The supply curve in a market is given by P = 6 + 1.75(Q). The first demand curve (D 1) is P = 48 - 2.0(Q), while the second demand curve (D 2) is P = 33.6 - 2.0(Q).

T-Mobile Wi-Fi @f 12%( O. 7:38 AM abbhosted.cuny.edu Home Take Test: Online Assignment 1 50 40 30 20 10 D1 D2 10 20 The change in price is a decrease of$_ A. S29.18 S6.40 S2.56 S4.35 E. S5.12

Answer 1

When demand curve is D1 , then at equilibrium , D1 = supply

Therefore, 48 - 2Q = 6 + 1.75Q

Or, 3.75Q = 42

Or, Q = (42/3.75) = 11.2

At that Quantitity, from any of D1 or supply equation we get, P = 48 - (2 * 11.2) = $ 25.6

When demand curve is D2, then at equilibrium, D2 = supply

Therefore, 33.6 - 2Q = 6 + 1.75Q

Or, 3.75Q = 27.6

Or, Q = (27.6/3.75) = 7.36

At that Quantitity, from any of D2 or supply equation we get, P = $18.88

The change in price is a decrease of $(25.6 - 18.88) = $6.72