Ans) 1) At equilibrium, Qd = Qs
400 - 10P = -200 + 20P
400 + 200 = 20P + 10P
600 = 30P
P = 20
To determine the equilibrium quantity, put value of P in either demand or supply equation.
Qd= 400 - 10P = 400 - 10×20 = 200 units
Qs = -200 + 20P = -200 + 20×20 = 200units.
So, equilibrium price is $20 and equilibrium quantity is 200 units.
2) Now,
At Q= 0 Qs= -200 + 20P
Qd = 400 -10P 0= -200 + 20P
0= 400 - 10P 200 = 20P
P = 40 P = 10
We have got, two points for demand curve ie (200,20).and (0,40)
We have also got two points for supply curve i.e (200,2) and (0,10)
Lets draw the graph using these two ÷
Consumer surplus = 1/2× base × height = 1/2× 200 × (40-20) = $2000
Producer surplus = 1/2× base × height = 1/2× 200×(20-10) = $1000
3) When price of land increases, input cost increases for meat. Supply curve will shift to the left and new equilibrium will be higher than the initial equilibrium. Price will increase and quantity will decrease.
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