Q1=750+5p
Q2=1200-2p
giving reasons identify the demand
and supply functions.
using a well labeled diagram explain what would happen if price
is shs50
To identify the demand and supply functions, we can look at the given equations. In this case, Q1 represents the quantity demanded, while Q2 represents the quantity supplied.
Demand function: Q1 = 750 + 5p
This equation shows the quantity demanded (Q1) as a function of the price (p). The coefficient of p, which is 5, indicates that the demand is elastic, meaning that the quantity demanded changes significantly in response to changes in price.
Supply function: Q2 = 1200 - 2p
This equation represents the quantity supplied (Q2) as a function of the price (p). The coefficient of p, which is -2, indicates that the supply is also elastic, meaning that the quantity supplied changes significantly in response to changes in price.
Now, let's explain what would happen if the price is shs50 using a well-labeled diagram:
1. Draw a graph with the quantity (Q) on the y-axis and the price (p) on the x-axis.
2. Label the axes and add units where appropriate.
3. Plot the demand and supply functions on the graph by substituting various values of price into the equations.
- For the demand function, calculate the quantity demanded (Q1) by substituting different price values into the equation.
- For the supply function, calculate the quantity supplied (Q2) by substituting different price values into the equation.
4. Connect the resulting points to form the demand and supply curves.
Now, let's analyze what would happen if the price is shs50:
1. Locate the price value (50) on the x-axis.
2. To find the quantity demanded, go up from the price point on the demand curve until you reach the curve.
3. To find the quantity supplied, go up from the price point on the supply curve until you reach the curve.
4. The point where the demand and supply curves intersect represents the equilibrium point.
- If the quantity demanded is higher than the quantity supplied, there is excess demand or a shortage, leading to rising prices.
- If the quantity demanded is lower than the quantity supplied, there is excess supply or a surplus, leading to declining prices.
- If the quantity demanded equals the quantity supplied, the market is in equilibrium, and the price is stable.
So, after following these steps, you can determine the impact of the shs50 price on the market by observing if there is excess demand, excess supply, or equilibrium.