ECONOMICS
Supply and Demand Functions
1. Demand curves
Price P $ 6 5 4 3 2 1 0
Qty Q 0 2 4 6 8 10 12
a.) From the schedule above determine the equation of the demand curve.
b.) What is the slope of the demand curve?
2. Equilibrium
Given Qd = 120 -2P and Qs=20P
a) Determine the equilibrium quantity and price, (Q,P).
b) Graph the equations for Qd and Qs from above.
3. The demand and supply curves for Good Y are given in the following table:
Price, P, $ Qty Demand Qd Qty Supply Qs
6 0 10,000
5 1,000 9,000
4 4,000 8,000
3 7,000 7,000
2 10,000 6,000
1 12,000 5,000
a) Determine the equilibrium quantity and price, (Q,P).
b) Find the equation of the demand curve.
c) At $4.50 will there be a shortage or a surplus?
d) At $3.25 will there be a shortage or a surplus?
e) Write the definitions of a surplus and shortage.
f) Graph the demand and supply curves.
4. Rent Control
Price, RENT QD QS
1300 130 35
1350 115 37
1400 100 41
1450 80 45
1500 72 52
1550 60 60
1600 55 70
1650 48 75
A. If the monthly rent is $1600, is there a SHORTAGE OR SURPLUS? What will RENT RATES DO?
B. If monthly rent is $1350, is there a SHORTAGE or SURPLUS of apartments? What will RENT RATES DO?
C. What is the equilibrium number of apartments pe month?
D. Graph the above data using supply and demand functions.
E. If governemnt regulations impose a price ceiling of $1400 per month, what will happen to the apartment market?
F. With a $1400 price ceiling, how much SURPLUS or SHORTAGE will there be in apratemnt availability?
5 Consumer Surplus 5)
Graph: Qd Pd Qs Ps
0 30 0 5
DEMAND (1800,14) (0,30), (1000, 20), (1250,18) 1000 20 1000 15
SUPPLY (1800,24), (0,5), (1000,15), (1250, 18) 1250 18 1250 18
1800 14 1800 24
A. Determine the market equilibrium price.
B. Using your graph of DEMAND and SUPPLY, calculate the CONSUMER SURPLUS with 1000 units consumed.
C. How much is producer surplus when 1000 units are produced and consumed?
D. What is the maximum price a consumer would pay for the commodity?
E. At what price will suppliers begin to produce the goods?
F. Using parts b) and c), from above, determine the total economic surplus when 1000 units of the commodity are produced and consumed.
QUESTION 5

Pd = -0.009Qd + 29.617

0 1000 1250 1800 30 20 18 14

Ps = 0.0105Qs + 4.8358

0 1000 1250 1800 5 15 18 24

Qty Q

PRICE, P