(A) Determine the Equilibrium Price and Quantity If Demand Is

question 8

Essay

(a) Determine the equilibrium price and quantity if demand is represented by the equation, P = 40 - .2QD and supply by the equation P = 10 + .4QS.(b) Suppose demand changes and is now represented by the equation P = 52 - .2QD.Has demand increased or decreased? What is the new equilibrium price and quantity?
(c) Suppose instead supply changes and is now represented by the equation P = 16 + .4QS.Has supply increased or decreased? What is the new equilibrium price and quantity?

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Definitions:

Fair-Value Hedge

A hedge of the exposure to changes in fair value of an asset or liability or an identified portion of such an asset or liability that is attributable to a particular risk.

Exchange Gain

A profit arising from changes in foreign exchange rates that benefit the value of a company's foreign currency denominated assets or liabilities.

April 30 Year-End

A fiscal year or financial reporting period that concludes on April 30th, often used by companies or organizations for tax or reporting purposes.

Cash-Flow Hedge

A financial strategy used to manage risks associated with the fluctuations in cash flows due to changes in exchange rates, interest rates, or commodity prices.