What is the minimum price suppliers will charge

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Let the supply and demand quantities, Qd and Qs for a single commodity be given in terms of the price P, by Qd = 10 ? 2P, Qs = P ? 2, Qd? 0, Qs ? 0, P ? 0. The equilibrium condition is Qd = Qs.

a) What is the minimum price suppliers will charge? Describe.

b) Calculate the equilibrium solution for P and Q. Please show calculations.

c) Impose the equilibrium condition, Qd = Qs = Q, and write the system for P and Q in matrix notation. That is, nd the 2 × 2 matrix A and the 2 × 1 column vector b in Ax = b where x =Q P. Let the rst row of A and the rst row of b be for the demand and let the second rows be for the supply.

Reference no: EM13687314

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