MONOPOLY
BUSINESS ECONOMICS COURSEWORK 2 ADBM
Answer 1(a) Demand and supply curves are graphical representations of the relationships between price and quantity. When we know the relationship we can easily find the relationship by easy algebra.
General equation a linear (straight-line) demand curve is P = a -bQD Placing the price on the Y axis and the quantity demanded on the X axis. a=Y intercept; -b=slope Clearly, a must be positive, and the minus sign on b indicates that quantity demanded and the price are inversely related.
General equation for a linear supply curve is P = c + dQS
Where c=Y intercept of the supply curve d is its slope. As with demand, the intercept c is positive, and the positive sign ond indicates a direct relationship between price and quantity demanded.
To find the equilibrium price, we simply add the condition that quantity demanded equals quantity supplied in equilibrium: QD = QS = QE
Demand Function 5P=-Q+46 Supply Function 4P=Q+8 QD =-5P+46 QS=4P-8
WN1 To work out equilibrium price and quantity we equate the equations
-5P+46=4P-8
-5P-4P=-8-46
-9P=-54
P=6
Substituting the P value in 5P=-Q+46 so, 5x6=-Q+46 Q=16
So when the Equilibrium Price is £6 the Equilibrium Quantity demanded is 16 units.
(b) New Demand equation: 5P=-Q+55 Supply Function 4P=Q+8 QD =-5P+55 QS =4P-8
-5P+55=4P-8
5P+4P=55+8 9P=63 P=7
So ,Q=4x7-8=20
When the Equilibrium Price is £7 the equilibrium quantity demanded is 20units.
(c) Cost: Cost refers to the total expenses incurred in the production of a commodity. Costs are studied both in the short run as well as in the long run.
There are 6 types of short run costs are:
1. Total Cost (TC)
2. Total Variable Cost (TVC)
3. Total Fixed Cost
Answer 1(a) Demand and supply curves are graphical representations of the relationships between price and quantity. When we know the relationship we can easily find the relationship by easy algebra.
General equation a linear (straight-line) demand curve is P = a -bQD Placing the price on the Y axis and the quantity demanded on the X axis. a=Y intercept; -b=slope Clearly, a must be positive, and the minus sign on b indicates that quantity demanded and the price are inversely related.
General equation for a linear supply curve is P = c + dQS
Where c=Y intercept of the supply curve d is its slope. As with demand, the intercept c is positive, and the positive sign ond indicates a direct relationship between price and quantity demanded.
To find the equilibrium price, we simply add the condition that quantity demanded equals quantity supplied in equilibrium: QD = QS = QE
Demand Function 5P=-Q+46 Supply Function 4P=Q+8 QD =-5P+46 QS=4P-8
WN1 To work out equilibrium price and quantity we equate the equations
-5P+46=4P-8
-5P-4P=-8-46
-9P=-54
P=6
Substituting the P value in 5P=-Q+46 so, 5x6=-Q+46 Q=16
So when the Equilibrium Price is £6 the Equilibrium Quantity demanded is 16 units.
(b) New Demand equation: 5P=-Q+55 Supply Function 4P=Q+8 QD =-5P+55 QS =4P-8
-5P+55=4P-8
5P+4P=55+8 9P=63 P=7
So ,Q=4x7-8=20
When the Equilibrium Price is £7 the equilibrium quantity demanded is 20units.
(c) Cost: Cost refers to the total expenses incurred in the production of a commodity. Costs are studied both in the short run as well as in the long run.
There are 6 types of short run costs are:
1. Total Cost (TC)
2. Total Variable Cost (TVC)
3. Total Fixed Cost