Question

Given the following demand and supply functions: P= $500-$10Qd and P=$100 + $20Qs

(a) Set up a table in excel to calculate the values of quantity demanded and supplied over the range of relevant prices (remember, think about the lowest and highest possible price in this market for your range; then determine what increments you would like to use. You shouldn’t use increments of 1 unit. Think about what would be more reasonable given your equations).

(b). Highlight the row corresponding to the equilibrium in the market. (if there is no exact row showing equilibrium, then highlight the two rows for which the equilibrium falls between).

(c). Graph the demand and supply curves together for the overall market. Be sure to label your axes, curves, and title your chart. Print your graph again conforming to normal standards of the page layout.

(d). Determine the amount of shortage or surplus at each price point (add a column to your table for surplus/shortage). When you are done with this question, you will need to print out your spreadsheet showing all rows and columns. Adjust your page layout to make them print in a reasonable font—you may use either portrait or landscape.

Answer 1

QD Shortage/Surplus -40 30 The required demand and supply schedule is below: QS 100 40 0 150 35 2.5 200 5 250 25 7.5 300 20 10 350 15 12.5 400 10 15 450 17.5 500 0 20 -32.5 -25 -17.5 -10 -2.5 5 12.5 20 The highlighted rows can be seen in above table

The required graph is below: Price Chart Title 600 500 400 300 200 100 0 5 10 15 30 35 40 45 20 25 QD ---QS Quantity The shortage/surplus are calculated above. They represent the difference between Qs and Qd Negative sign values represent shortage while positive sign values represent surplus