Hirsty
Lv 5
Hirsty asked in Social ScienceEconomics · 1 year ago

How do I solve for equilibrium price and quantity?

Sarah devotes £1000 of her yearly salary to leisure activities. She divides her budget on leisure activities between films & video games. The price of a video game is £30 and the market supply curve for movies is:

Pm = 4 +(1/3)Qm

and the market demand curve is: Pm= 60-2Qm

where pm is the market price of movies and qm is the quantity in thousands of movies.

What is the equilibrium price and quantity for movies and the producer and consumer surplus?

1 Answer

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  • Oiy
    Lv 6
    1 year ago
    Favourite answer

    Dm=DS, or 4+1/3Qm=60-2Qm, solve for Qm* and then Pm*. A consumer surplus = (60-Pm*)Qm*/2

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