Practicing Success
Given qD = 2,000 -p and qS = 200 + 2p. What will be the algebraic expression for excess demand? |
3p-1800 1800 -3p 2p-600 3p-1600 |
1800 -3p |
Excess demand is demand minus supply. So, Qd - Qs = 2000 - p - (200 + 2p) =2000 - p - 200-2p = 1800 -3p. At equilibrium price, this excess demand will be zero. In given question, equilibrium price n calculation will be 600. Putting p = 600 in excess demand equation of 1800 - 3p, we get zero excess demand. |