Question

Given market demand Qd=50-p, and market supply p=Qs+5.what would be the state of the market if market price was fixed at Birr 25 per unit?​

Answer 1

The state of the market if market price was fixed at Birr 25 per unit is excess demand

Quantity demanded

Qd = 50 - p

p = Qs + 5

p - 5 = Qs

if market price was fixed at Birr 25 per unit?

Qd = 50 - p

= 50 - 25

Qd = 25

Qs = p - 5

= 25 - 5

Qs = 20

The state of the market if market price was fixed at Birr 25 per unit is excess demand (demand greater than supply) leading to an increase in price.

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