Questions

1. What do you know about demand and supply function? Give short answer
2. How demand and supply will be equilibrium? Show suitable example with graph.
3. How change in demand variables affect on supply? Give logic to support your answer.
4. What is market equilibrium? How market equilibrium helps mathematician to calculate an
appropriate demand and supply quantity?
3. You have given Qs = 0.5 + P (Qs is quantity of sugar in kg and P is price of sugar). Calculate
the quantity of sugar supply per year when average price will be Rs 30,40,50 and 25 with
graph. Does it follow the law of supply? Give your reason.
4. Suppose demand function (QD) is 200 - 3P and supply function (QS) is -50 + 1.5P with price
of Rs 75. At what point, it will be equilibrium? Show graphically.
5. Corona virus hit the world and changed the global scenario. For each of the following
scenarios, use a supply and demand diagram to show the effect on the equilibrium price and
quantity in market. Explain whether there is a shift in the demand curve, the supply curve,
or neither.

(a) Corona virus wave punches the market. Show the effect in the education market.

(b) The government hikes a tax on schools which is paid by schools. What is the effect in the
education market?
(c) Nepal and India are major supplier of labours in gulf nations. Workers in India decide to
go on strike. Show the effect on the market for Indian labour market.
(d) Show the effect of the situation described in (c) on the market for Nepali labours.

5. You have given the information about CocaCola and Pepsi. In this market, the supply
curve is given by QS = 25Pc -150Pp and the demand curve is given by QD = 80 - 25Pc + 15Pp
where C denotes Coca Cola, P denotes Pepsi.
(a) Assume that Pc is fixed at Re5 and Pp = 7. Calculate the equilibrium price and quantity.
(b) Suppose the price of CocaCola to PC = 12. Find the new equilibrium price and quantity of
CocaCola. Sketch graph to illustrate your answer.
(c) Suppose Pc = 10 but the price of Pepsi drops to Pp = 5. Find the new equilibrium price
and quantity.
(d) Suppose Pc = 10, Pp = 50, and there is a price ceiling on apple juice of Pp = 15. Is there
change in demand for Pepsi? Draw a graph to illustrate your answer.

6. A shopkeeper supplies product in the given equation Qs = -64.5 + 37.5Ps – 7.5W

Where Qs is number of soap products supplied each month, Ps is price of soap in Rs, and W is
the hourly wage rate paid to workers.
Assume that the price of soap is Rs 30 and the hourly wage is Rs 1.5.
1. Determine the number of soaps supplied each month.
2. Determine the inverse supply function for an individual seller.
3. Determine the slope of the supply curve.
4. Determine the new vertical intercept of the individual S product supply curve if the hourly
wage were to rise to Rs 1.5 from Rs 2.0.
7. An individual consumer’s weekly demand for milk is given by the equation
Qm = 20 – 2Pgm+15I + 5Pcm
Where Qm is the milk in litre demanded each week, Pgm is the price of per litre goat milk, I is
the weekly income, and Pcm is the price of cow milk per litre. Here, the price of cow milk is
positive, indicating that when goat milk increases in price, more cow milk is purchased.
Assume that the price of goat milk per litre is Rs 25, household income is Rs 15000 per
week, and the price of cow milk is Rs 35 per litre.
1. Calculate the amount of goat milk needed each week.
2 Given the values for I and Pcm, determine the inverse demand function.
3 Sketch the slope of the demand curve for each milk.
4 Show the demand curve if income changes to Rs 40000 per month.
8. A customer’s monthly demand for lentils is given by the equation
Qd = 21 – 4Pl + 15 I + 2 Pv
where Qd is the lentils demanded each week, PI is the price lentils in Rs, per kg I is the
monthly income of customer, and Pv is the price of vegetable per kg. Assume that income is
Rs 80000 per month, and the price of vegetable is Rs 50 per kg. The market has 500 regular
customers with this demand function.
1. Determine the market aggregate demand function.
2. Determine the inverse market demand function.
3. Determine the slope of the market demand curve.

9. Assume that the price of a box of an electric bulb is Rs 2000 per box and delivery charge is
Rs 50 per box. The suppliers are 10.

1. Find the market aggregate supply function.

2. Calculate the inverse market supply function.
3. What will be the slope of the aggregate market supply curve.