The following equations describe the supply and demand for computer support serv

Question

The following equations describe the supply and demand for computer support services catering to small businesses. Q is the number of businesses to be serviced and P is the monthly fee. QD= 3,000 - 10P QS = -1,000 + 10P (a.) At what monthly fee would quantity demanded equal zero? (b.) At what monthly fee would quantity supplied equal zero? (c.) Plot the supply and demand curves. (d.) What is the equilibrium price and output level? (e.) Suppose the demand increases and leads to a new demand curve: QD = 3,500 - 10P What is the new equilibrium price and output level? (f.) Now (using the new demand curve) suppose that new producers enter the market and the supply increases to: Qs = -500 + 10P. What is the new equilibrium price and output level? (g.) Show these changes on the graph

Explanation / Answer

Answer:- i hope it helps you 1. Qd = 3,000-10 P 0 = 3,000 10 P = 3,000 P = 300 2. Qs = -1,000+ 10 P 0 = -1,000+ 10 P -10P = -1,000 P = 100 3. Neither Qs nor Qd has any meaning if negative Scale the Y-axis from 0 -2,000 to 3,000 or 4,000 Neither are negative values of P of interest. Scale the X-axis from 0 to 300-400 Plot 2 points from each equation and draw a straight line between them. 4. Equilibrium price output level: Qd = Qs 3,000 - 10P = -1,000 + 10P 4,000 = 20P P = 200 Qd = Qc = 3000 - 2000 = 1,000 5. Supply would increase to meet demand. 6. New equilibrium point: Qd = Qs 3,500 - 10P = -1,000 + 10P 4,500 = 20P P = 225 Qd = Qc = 3500 - 2250 = 1,250 7. New equilibrium from new supplies: Qd = Qs 3,500 - 10P = -500 + 10P 3,000 = 20P P = 150 Qd = Qc = 3000 - 500 = 2,500 Plot new lines on your graph using different colors for the new conditions.

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