The demand and supply curves for the market are given by: Demand: Qd = 16000 – 24P Supply: Qs = 2000 + 32P
A maximum price of $200 is proposed.
(ii) Calculate the equilibrium quantity that would prevail without the maximum price
As per the question
Market demand function Qd = 16000 -24P
Market supply function Qs = 2000 + 32P
Proposed maximum price = $200
Equilibrium quantity without the maximum price = ?
At the market equilibrium the Qd = Qs
16000 -24P = 2000 + 32P
16000 – 2000 = 32P + 24P
14000 = 56P
56P=14000
P=14000/56 =250
Substituting the value of P=250, in market demand function to the value of equilibrium quantity (Q)
Qd = 16000 -24(250) = 16000 – 6000 = 10000
So without the maximum price, the equilibrium quantity that would prevail in market is 10000 units
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