Q: the following relations describe monthly demand and supply for a computer support

service catering to small businesses:

Qd=3,000 -(minus)10 P
Qs=1,000+ 10P

where Q is the number of businesses that need services and P is the monthly fee, in
dollars.

a) At what average monthly fee would demand equal zero?

$300

b)at what average monthly fee would supply equal zero?

Qs = 1,000 + 10p

0 = 1,000 + 10p

10p = -1,000

p = -$100

Supply would never equal 0

c)Plot the supply and demand curves.

Please see the attached excel sheet

d)What is the equilibrium price/output level?

Price = $100

Quantity = 2,000

e)suppose demand increases and leads to a new demand curve:

Qd=3,500 -(minus)10P
what is the effect on supply? What are the new equilibrium P and Q?

No effect on Supply.

Qd = 3,500 – 10p
Qs = 1,000 + 10p

At Equilibrium:

3,500 – 10p = 1,000 + 10p

2,500 = 20p

P = $125

Qd = 3,500 – 10(125)

= 3,500 – 1,250

= 2,250

New Equilibrium Price = $125

New Equilibrium Quantity = 2,250

f)Suppose new suppliers enter the market due to the increase in demand so the new
supply curve is Q= -(minus)500 + 10P. What are the new equilibrium price and
equilibrium quantity?

Qs = -500 + 10p
QD = 3,500 – 10p

-500 + 10p = 3,500 -10p

4,000 = 20p

P = $200
Q = -500 + 10($200)

= -500 + 2,000

= 1,500

G) Show these changes on the graph.