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Suppose the demand and supply curves of a Commodity-X is given by the following two

equations simultaneously:

Qd = 200 – p Qs = 50 + 2p

i) Find the equilibrium price and equilibrium quantity.

ii) Suppose that the price of a factor of production producing the commodity has

changed, resulting in the new supply curve given by the equation

Qs’ = 80 +2p

Analyse the new equilibrium price and new equilibrium quantity as against the

original equilibrium price and equilibrium quantity.

${Q}_{d}={Q}_{s}\phantom{\rule{0ex}{0ex}}200-p=50+2p\phantom{\rule{0ex}{0ex}}p=\mathrm{Rs}50$

By substituting value of

*p*in

*Q*, we get:

_{d}${Q}_{d}=200-50=150\mathrm{units}$

ii) When price of factor changed, the new supply curve is

${Q}_{s}^{\text{'}}=80+2p$

To calculate new equilibrium price and quantity, we equate

${Q}_{d}={Q}_{s}\text{'}$

$200-p=80+2p\phantom{\rule{0ex}{0ex}}p=\mathrm{Rs}40$

By substituting the value of

*p*in

*Q*, we get:

_{d}${Q}_{\mathit{d}}=200-40=160\mathrm{units}$

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