Question

1. (Market Equilibrium). Aggregate market supply and demand for good X are the following:

                     Q_d (P)=828-27P

                     Q_s (P)=-184+19P

2. (3 points) Calculate the equilibrium price and quantity

 

3. (3 points) Does the market demand function follow the law of demand at the equilibrium price? EXPLAIN

 

4. (3 points) Does the market supply function follow the law of supply at the equilibrium price? EXPLAIN

 

5. (3 points) Is there a surplus or shortage at the equilibrium price? EXPLAIN

 

6. (3 points) Calculate the surplus or shortage when the price is $26