ANANAYO, CHERIE LYN S.

Required:

1. Formulate the Demand Function

ANSWER:
A.
PRICE (x) QUANTITY DEMANDED 𝒙𝟐 xy
(y)
45 700 2025 31500
50 650 2500 32500
55 600 3025 33000
60 550 3600 33000
65 500 4225 32500
∑x= 275 ∑y= 3000 ∑𝑥 2 = 15,375 ∑xy= 162,500
B. Formulating the 3 equations
 Na + ∑xb = ∑y
5a + 275b = 3,000
 ∑xa + ∑𝑥 2 b = ∑xy
275a + 15,375b = 162,500
 Q(Na + ∑xb = ∑y)
Q=275/5=55
55 (5a + 275b = 3,000)
275a + 15,125b = 165,000

C. Formulate the Demand Function

 Value of b
275a + 15,375b = 162,500
275a + 15,125b = 165,000
250b = -2500
b = -10

 Value of a
5a + 275b = 3,000
5a + 275 (-10) = 3,000
5a – 2750 = 3,000
5a = 3,000 + 2750
5a = 5750
5a = 5750
5
a = 1,150
D. Demand Function
Qd = a – bp
Qd = 1,150 – 10p
2. Formulate the supply function
ANSWER:

A. Formulate the supply function

PRICE (x) QUANTITY SUPPLIED 𝒙𝟐 xy
(y)
45 500 2025 22500
50 600 2500 30000
55 700 3025 38500
60 800 3600 48000
65 900 4225 58500
∑x= 275 ∑y= 3500 ∑𝑥 = 15,375
2 ∑xy= 197,500
B. Formulating the 3 equations
 Na + ∑xb = ∑y
5a + 275b = 3,500
 ∑xa + ∑𝑥 2 b = ∑xy
275a + 15,375b = 197,500
 Q(Na + ∑xb = ∑y)
Q=275/5=55
55 (5a + 275b = 3,500)
275a + 15,125b = 192,500

C. Formulate the Demand Function

 Value of b
275a + 15,375b = 197,500
275a + 15,125b = 192,500
250b = 5000
b = 20

 Value of a
5a + 275b = 3,500
5a + 275 (20) = 3,500
5a + 5,500 = 3,500
5a = 3,500 - 5,500
5a = -2000
5a = -2000
5
a = -400
D. Supply Function
Qs = a + bp
Qs = -400 + 20p
3. Compute for equilibrium price and equilibrium quantity.
A. Equilibrium Price
Qd=Qs
1,150 - 10p = -400 + 20p
-10p – 20p = -400 – 1,150
-30p = -1550
-30
p= Php 51.67

B. Equilibrium Quantity
Qd = 1,150 -10p
Qd = 1,150 – 10 (51.67)
Qd = 1,150 – 516.67
Qd = 633.33

Qs = -400 + 20p
Qs = -400 + 20(51.67)
Qs = -400 + 1033.33
Qs = 633.33