The Demand and Supply Functions for Sweatshirts (The Basic Grey

question 76

Essay

The demand and supply functions for sweatshirts (the basic grey kind)are as follows:

The equations for the demand and supply functions above are as follows:
Qd = 20,000 - 500P
Qs = -8,000 + 3000P
a.Solve for the equilibrium price and quantity.(Hint: at equilibrium, quantity supplied equals quantity demanded.)
b.Assume the supply function changes to:
Qs = -5,000 + 3000P
Does supply increase or decrease? What is the new equilibrium price and quantity?

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Definitions:

Tax Imposed

An obligatory financial charge or other type of levy imposed upon a taxpayer by a governmental organization in order to fund government spending and various public expenditures.

Grapefruit

A citrus fruit known for its slightly bitter and sour taste, often eaten as part of breakfast or used in cooking.

Equilibrium Price

The price at which the quantity of goods supplied is equal to the quantity of goods demanded.

Inverse Demand Function

A function that expresses the price of a good or service as a function of the quantity demanded, typically used in economics to determine pricing strategies.