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antoniya [11.8K]
3 years ago
10

Given the following two functions. Qa=50+p. Qb=200-4p. (A) IDENTIFY WHICH IS THE SUPPLY FUNCTION OF DEMAND FUNCTION

SAT
1 answer:
morpeh [17]3 years ago
7 0
(A) The supply function generally is considered to have positive slope. Qa has positive slope. Qb has negative slope, so is probably the demand function.
  supply function: Qa
  demand function: Qb


(B) The equilibrium price is the price that makes supply equal to demand.
  Qa = Qb
  50 +p = 200 -4p
  5p = 150
  p = 30
The equilibrium price is 30.

(C) The price elasticity of supply is computed as
  Es = (dQa/dp)·(P/Qa) = 1·p/(50+p)
  Es = p/(50+p)

At p=30, the numerical value is Es = 30/80 = 3/8. Qualitatively, the supply is inelastic.
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