Reference no: EM132445884
Create a spreadsheet illustrating the determination of market equilibrium.
Please put all work on a single spreadsheet page!
Please make all attempts to create a visually appealing spreadsheet!
1. To begin, chose your own values for the parameters below in order to create your inverse supply and demand curves.
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P = a - bQ
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Demand Equation
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P = c + dQ
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Supply Equation
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where: a = demand price intercept
b = demand slope
c = supply price intercept (be sure that a > c)
d = supply slope.
2. Create a table showing quantity and the various prices that consumers are willing to pay and prices that producers are willing to accept.
So this table should have 3 columns: Price, Quantity Demanded, Quantity Supplied;
Use this table to create an X-Y chart showing the supply and demand curves. (You will have price on the Y-axis and quantity on the X-axis.)
In creating your table, please make sure that you "anchor" the parameter values to ones chosen in Step 1. (By doing this, your graphs and calculations will adjust automatically whenever you change any of the parameter values).
3. Create an area on your spreadsheet that illustrates the calculations of equilibrium price and quantity. Your equations for these values should refer to the "anchored" parameter values chosen in Step 1. For example:
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Equilibrium Price =
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Equilibrium Quantity =
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The second column will contain the formula for each of the variables using the anchored parameter values.
4. What happens to equilibrium price and quantity if your demand intercept, a, increases by 25%?
5. What happens to equilibrium price and quantity if your supply intercept, c, increases by 25%?
It would be great if you can create a file where with a few steps you can answer the questions to part 4. and 5., and where the graph automatically reflects the new parameters, a and c.