event
Demand
supply
Eq price
Eq quantity
The price of milk decreases
milk is used to produce ice
cream
Decrease in the price of milk
shake ( milk shake and ice
cream are substitutes
The Palestinian government
gives subsidy for all of the
Palestinian factories
The Palestinian government
gives to increase salaries 10%
In summer people tend to buy
more from ice cream
A new ice cream factory
opened in Palestine
Inflation increased ( which
includes the price of milk will
increase and the factory
workers' wage will increase too
)
Increase
Unchanged
Uncertain
Unchanged
Decrease
Unchanged
Decrease
Increase
Unchanged
Decrease
Increase
Decrease
Increase
Uncertain
Uncertain
Increase
Unchanged
Decrease
Increase
Decrease
Increase
Uncertain
Uncertain
Decrease
Increase
Increase
Decrease
Decrease
Q2
To find the equilibrium price and quantity, we need to set the quantity demanded (Qd) equal to the
quantity supplied (Qs) and solve for the price (P).
Given:
Qd = 300 - 3P
Qs = 2P + 200
Setting Qd equal to Qs:
300 - 3P = 2P + 200
Now, let's solve for P:
300 - 200 = 2P + 3P
100 = 5P
P = 100/5
P = 20
Substituting the value of P back into either Qd or Qs, we can find the equilibrium quantity:
Qd = 300 - 3P
Qd = 300 - 3(20)
Qd = 300 - 60
Qd = 240
Therefore, the equilibrium price is P = 20, and the equilibrium quantity is Q = 240.
Now let's determine which equation represents demand and which represents supply. The equation with
a negative coefficient for P (in this case, -3P) represents demand, while the equation with a positive
coefficient (in this case, 2P) represents supply. Therefore, Q1 = 300 - 3P represents demand, and Q2 = 2P
+ 200 represents supply.
To draw the curves showing the equilibrium points, we can plot the demand and supply equations on a
graph. The x-axis represents the price (P), and the y-axis represents the quantity (Q).
The demand curve: Q1 = 300 - 3P
The supply curve: Q2 = 2P + 200
As for a supply surplus, it occurs when the quantity supplied exceeds the quantity demanded. In this
case, at the equilibrium point (P = 20, Q = 240), there is no supply surplus because Qs = Qd. However, if
we consider a different price point, such as P = 30, then we can calculate the corresponding quantities:
Qd = 300 - 3P
Qd = 300 - 3(30)
Qd = 300 - 90
Qd = 210
Qs = 2P + 200
Qs = 2(30) + 200
Qs = 60 + 200
Qs = 260
At P = 30, Qd = 210, and Qs = 260. Since Qs > Qd, there is a supply surplus of 260 - 210 = 50 units.
In summary:
- Equilibrium price: P = 20
- Equilibrium quantity: Q = 240
- Q1 represents demand, and Q2 represents supply.
- Equilibrium point: (P = 20, Q = 240)
- There is a supply surplus at P = 30, with Qs = 260 and Qd = 210.
Lastly here is the graph showcasing the equilibrium point at p=20 and q= 240
20----------
240