Suppose the market demand for good A given by Qd= 300 -20 P and the market supply for Good A is given by Qs=20P-100,where P=price of Good A.

Q;Graph the supply and demand schedules for Good A using P5 through P15 as the value of P.
Q; In equilibrium, how many good A would be.sold and at what prices?
Q: what would happen if supplier set the price of goof A at P15? Explain the market adjustment process.

At some price P the supply just meets the demand.

Qd= 300 -20 P
=
Qs=20P-100
so
300 - 20 P = 20 P - 100
40 P = 400
P = 10
Q = 200 - 100 = 100

If P is fixed at 15 then fewer will be bought
Qdemand = 300 - 20(15)
= 300 - 300
= 0
No one is dumb enough to pay 15

To graph the supply and demand schedules for Good A, we need to substitute values of P from 5 to 15 into the equations Qd = 300 - 20P and Qs = 20P - 100.

Supply schedule:
P = 5:
Qs = 20(5) - 100 = 0

P = 6:
Qs = 20(6) - 100 = 20

P = 7:
Qs = 20(7) - 100 = 40

P = 8:
Qs = 20(8) - 100 = 60

P = 9:
Qs = 20(9) - 100 = 80

P = 10:
Qs = 20(10) - 100 = 100

P = 11:
Qs = 20(11) - 100 = 120

P = 12:
Qs = 20(12) - 100 = 140

P = 13:
Qs = 20(13) - 100 = 160

P = 14:
Qs = 20(14) - 100 = 180

P = 15:
Qs = 20(15) - 100 = 200

Demand schedule:
P = 5:
Qd = 300 - 20(5) = 200

P = 6:
Qd = 300 - 20(6) = 180

P = 7:
Qd = 300 - 20(7) = 160

P = 8:
Qd = 300 - 20(8) = 140

P = 9:
Qd = 300 - 20(9) = 120

P = 10:
Qd = 300 - 20(10) = 100

P = 11:
Qd = 300 - 20(11) = 80

P = 12:
Qd = 300 - 20(12) = 60

P = 13:
Qd = 300 - 20(13) = 40

P = 14:
Qd = 300 - 20(14) = 20

P = 15:
Qd = 300 - 20(15) = 0

Now we can plot the supply and demand schedules on a graph with price (P) on the y-axis and quantity (Q) on the x-axis. By connecting the points, we can see the supply and demand curves intersect at the equilibrium point.

In equilibrium, the quantity demanded is equal to the quantity supplied. From the graph, we can determine the equilibrium price and quantity of Good A.

From the graph, we see that at P = 10, the quantity supplied (Qs) and quantity demanded (Qd) are both 100. Therefore, in equilibrium, 100 units of Good A would be sold at a price of $10.

If the supplier sets the price of Good A at P = 15, it is above the equilibrium price. This means that the price is higher than what buyers are willing to pay. As a result, there will be an excess supply or a surplus in the market.

With a price of P = 15, the quantity supplied (Qs) would be 200, while the quantity demanded (Qd) would be 0. This imbalance will lead to a downward pressure on price as suppliers try to sell their excess supply.

As the price decreases, more buyers will be willing to purchase Good A. This will increase the quantity demanded and decrease the quantity supplied until a new equilibrium is reached. The market adjustment process will continue until the price falls to the equilibrium level of $10, where the quantity demanded and supplied are both 100 again.

To graph the supply and demand schedules for Good A using P5 through P15 as the value of P, we can substitute these values for P in the given equations.

For the demand schedule:
Qd = 300 - 20P

For P5:
Qd = 300 - 20(5) = 300 - 100 = 200

For P6:
Qd = 300 - 20(6) = 300 - 120 = 180

Continuing this process for P7 through P15, we get the following demand schedule:

P | Qd (Demand)
---|------------
P5 | 200
P6 | 180
P7 | 160
P8 | 140
P9 | 120
P10| 100
P11| 80
P12| 60
P13| 40
P14| 20
P15| 0

For the supply schedule:
Qs = 20P - 100

For P5:
Qs = 20(5) - 100 = 100

For P6:
Qs = 20(6) - 100 = 120

Continuing this process for P7 through P15, we get the following supply schedule:

P | Qs (Supply)
---|------------
P5 | 100
P6 | 120
P7 | 140
P8 | 160
P9 | 180
P10| 200
P11| 220
P12| 240
P13| 260
P14| 280
P15| 300

To graph the supply and demand schedules, we can plot the price (P) on the x-axis and the quantity (Q) on the y-axis. The demand curve is downward sloping, while the supply curve is upward-sloping.

In equilibrium, the quantity demanded (Qd) equals the quantity supplied (Qs). So, we need to find the point where the demand and supply curves intersect.

Looking at the schedules, we can see that at P10, the quantity demanded is 100 and the quantity supplied is also 100. Thus, in equilibrium, 100 units of good A would be sold at a price of P10.

If the supplier sets the price of good A at P15, it is above the equilibrium price. This means that the price is higher than what consumers are willing to pay (demand) and the quantity supplied (Qs) by the suppliers will be higher than the quantity demanded (Qd).

In this situation, there will be excess supply (or a surplus) of good A in the market. Suppliers will find it difficult to sell all the goods they have produced at the higher price, leading to an excess inventory of unsold goods.

To adjust to this market imbalance, suppliers will respond by lowering the price of good A. As the price decreases, the quantity demanded (Qd) will increase, and the quantity supplied (Qs) will decrease. This adjustment process will continue until a new equilibrium is reached, where the quantity demanded once again equals the quantity supplied.

Overall, setting the price of good A at P15 would result in a surplus, leading to a downward pressure on the price until a new equilibrium is established.