Find the equilibrium price and quantity

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1. The market for Kombucha is represented by the following equations:

Qd= 90-2P

Qs=P

a. Find the equilibrium price and quantity

b. What if the price is $20? What will Qd and Qs be?

c. If the market price was $20, would there be a surplus or a shortage in the market? Illustrate your answer in a graph showing a demand curve, a supply curve and the market price and effect of that price. Be sure to specific if there are changes in DEMAND or QTY DEMANDED, SUPPLY or QTY SUPPLIED and show the changes on the graph to match your answers.

d. Given your answer in part c, would you expect the price to rise or fall in order to find equilibrium? Explain your reasoning.

e. On the same graph or a new one if you prefer, show what would happen if medical testing showed that drinking Kombucha caused excessive weight gain and terrible breath too. Point out what you think would be the end result in regards to price and quantity. For this, I expect you to show and tell if either demand/supply/quantity demanded/quantity supplied would change and if there would be a change in equilibrium price and/or quantity.

Reference no: EM132181414

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