The market demand curve for a good X is \(P_X=2000-4Q\) and the market supply curve is \(P_X=300+6Q\).…
Equating demand and supply gives \(2000-4Q=300+6Q\), so \(10Q=1700\) and \(Q=170\). Substitution gives \(P_X=2000-4(170)=1320\), so the equilibrium before the ceiling is INR…
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The market demand curve for a good X is and the market supply curve is . The government fixes the price ceiling at INR 500. What is the equilibrium price and quantity before price ceiling?
Answer and explanation
Correct answer A
Equating demand and supply gives , so and . Substitution gives , so the equilibrium before the ceiling is INR 1320 and 170 units.
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Kerala SET (LBS Centre)