The demand and supply function of a commodity are given as follows:
Quantity demanded (Qd) = 20 - 2p
Quantity supplied (Qs) = 6P - 12 where P = price in naira
(a) Determine the equilibrium price and quantity bought and sold at that price.
(b) If the price of the commodity is fixed at N60.00, what is the magnitude of the excess supply?
Qd = 20 - 2p
Qs = 6p - 12
(a) Qd = Qs
20- 2P = 6P - 12
8P = 32, p = \(\frac{32}{8}\) = p =4
Qd = 20 - 2p = 20 - 2(4) = 20 - 8 =12
Qs = 6p - 12 = 6(4) - 12 = 24 - 12 = 12
(b) Qs = 6p - 12 = 6(6) -12 = 36 - 12 =24
The magnitude of the excess supply will be 24 - 12 = 12
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