Question

Market demand for rhododendrons in Ann Arbor is given by D(p) = 120 - 3p and the market supply is S(p) = 3p - 30. Show all your work to answer the questions below. (1) Calculate the equilibrium quantity and price.(2) Calculate the consumer surplus and the producer surplus.

Answer 1

Answer: The answer is price is 15 equilibrium quantity is 75 Consumer surplus is 60 Producer surplus is 90

Explanation:

D=120-3P

S= 3P - 30

At equilibrium Qd=QS

120-3P=3P-30

Collect like terms

120-30=3P+3P

Divide both sides by 6

90/6=6P/6

15=P

P=15

Substitute the value of P into equation 1

120-3 (15)

120-45

=75

To calculate the consumer surplus

Equilibrium quantity-Price

75-15

=60

To calculate producer surplus

Equilibrium quantity +Price

75+15

=90