Question 2 The market for smartphone covers is represented by the following demand and supply equations: Qd = 100 â2P Qs = -20 + 2P where Q is measured in 000âs (a) Calculate the equilibrium price and quantity of smartphone covers. (b) Using the demand and supply equations draw the demand and supply curves. (c) In the diagram you drew in part (b) illustrate consumer surplus and producer surplus. (d) What is the value of consumer surplus, producer surplus and total surplus at the equilibrium price? (e) Now suppose there is a reduction in the supply of smartphone covers that shifts the supply curve to the left and increases the equilibrium price to â¬35 per cover. What happens to consumer surplus? Hint: Use the demand curve to calculate the new equilibrium quantity of smartphone covers
Question 2 The market for smartphone covers is represented by the following demand and supply equations: Qd = 100 â2P Qs = -20 + 2P where Q is measured in 000âs (a) Calculate the equilibrium price and quantity of smartphone covers. (b) Using the demand and supply equations draw the demand and supply curves. (c) In the diagram you drew in part (b) illustrate consumer surplus and producer surplus. (d) What is the value of consumer surplus, producer surplus and total surplus at the equilibrium price? (e) Now suppose there is a reduction in the supply of smartphone covers that shifts the supply curve to the left and increases the equilibrium price to â¬35 per cover. What happens to consumer surplus? Hint: Use the demand curve to calculate the new equilibrium quantity of smartphone covers
