Suppose the value of demand and supply curves of a commodity-X is given by the following two equation simultaneously: Q_(d) = 200 - 10 p "" Q_(s) = 50 + 15p (i) Find the equilibrium price and equilibrium quantity of commodity X. (ii) Suppose that the price of a factor inputs used in producing the commodity has changed, resulting in the new supply curve given by the eqation Q_(s) = 100 + 15 p Analyse the new equilibrium the new equilibrium price and new equilibrium quantity as against the original equilibrium price and equilibrium quantity.

Suppose the value of demand and supply curves of a commodity-X is give

1.	Suppose the value of demand and supply curves of a commodity-X is given by the following two equation simultaneously: Q_(d) = 200 - 10 p "" Q_(s) = 50 + 15p (i) Find the equilibrium price and equilibrium quantity of commodity X. (ii) Suppose that the price of a factor inputs used in producing the commodity has changed, resulting in the new supply curve given by the eqation Q_(s) = 100 + 15 p Analyse the new equilibrium the new equilibrium price and new equilibrium quantity as against the original equilibrium price and equilibrium quantity.
Answer» Solution :(i) We KNOW that the EQUILIBRIUM price and QUANTITY are achieved at: `Q_(d) = Q_(s)` `200 - 10p = 50 + 15p` `150 = 25 p` Therefore, Equilibrium Price `(p) = Rs 6` And Equilibrium Quantity `(Q) = 200 - (10) (6) = 140` units (ii) If the price of factor of production has changed, then under the NEW conditions: `Q_(d) = Q_(s)` `200 - 10 p = 100 + 15p` `25p = 100` Therefore, Equilibrium Price `(p) = Rs 4` And, Equilibrium Quantity `(q) = 200 - (10)(4) = 160` units Thus, as the equilibrium price is decreasing, the equilibrium quantity is increased.