Answer to Question #334657 in Macroeconomics for MJSA

Question

The demand and supply function of a good are given by

P = -3Qd +100

P =2Qs +50

Where p, Qd and Qs denotes the price, quantity demanded and quantity supplied respectively.

A. Calculate the equilibrium price and quantity.

A new fixed tax of £5 per good imposed by the government.

B. Calculate the new equilibrium price and quantity?

C. Who pays the tax?

Given the above demand equation if fixed costs are 15 and variable costs are 40 per unit.

D. Obtain and expression for profit in term of Q.

E. Sketch a graph for profit against quantity.

F. Find the breakeven point.

G. Find the quantity of products sold that given a profit of 42.

H. Find the maximum profit and the value of Q at which it is achieved.

Answer 1

$P=-3Q_d+100,$

$P=2Q_s+50,$

$Q_d=Q_s,$

$-3Q_d+100=2Q_d+50,$

$5Q_d=50,$

$Q_d=Q_s=10,$

$P=70.$