1.If crude oil world demand and supply function are Qd= 24.08 – 0.06P; QS = 21.

74
+ 0.07 P
Where Q is measured in billion barrels and P is measured in dollars per barrel,
please find the equilibrium price and quantity at crude oil market?
We have Qd=Qs
 24.08 – 0.06P=21.74 + 0.07 P
 24.08-21.74=0.06+0.07P
 2.34=0.13P => P=18. Thus equilibrium price is equal to 18
Equillibrium quantity :
Qd=24.08 – 0.06P Qs=21.74 + 0.07 P
 Qd =24.08 – 0.06x18 = 23 => QS = 21.74 + 0.07x18 = 23
2.If the demand function of orange is Qd =-200P+1000, the daily orange quantity
and price are Q and P respectively. Supply function is QS =800*P, please find the
equilibrium price and quantity in orange market?
We have Qd = QS
 -200P+1000=800*P
 -200P-800P=-1000
 -1000P=-1000 => P=1. Thus equilibrium price is equal to 1
Equillibrium quantity :
Qd =-200P+1000 QS =800*P
 Qd=-200*1+1000 = 800 => Qs= 800*1= 800
3.If question 2 each orange imposed $0.5 consumption tax on supplier, please
find (1) new supply and demand funtions; (2) new equibrilium quantity and
price, (3) new supply price after tax, (4) draw the demand and supply curves to
explain your answers.
(1)
Qs=800*P
=> New supply function: Qs=800*(P-0.5)
= 800P-400
Qd =-200P+1000
(2)
800P-400=-200P+1000
 1000P=1400
 P=1.4
Q= 800(1.4)-400 = 1120-400=720/day
(3)
P’= P0-tax = 1.4-0.5 = 0.9
(4)