Explain in detail the supply and demand model 15 marks Expla

Explain in detail the supply and demand model. (15 marks) Explain the impact on a market of the imposition of a maximum price for basic foodstuffs. Show the impact on the worlid market equilibrium price and quantity of ol due to an ncrease in economic growth in the world economy. Total 25 marka)

Solution

1) The demand curve shows the quantity demanded by each individual at different price level and supply curve shows the quantity supplied by the individual firm at different price level. The equilibrium exist where the two curves intersect. One can also find the supply and demand for market using the individual supply and demand. To calculate the market supply and demand one should sum horizontally i.e. adding quantities demanded for all consumers at a given price level nad similarly for supply. The market equilibrium exists where supply demand intersects. This is the supply demand model.

*For solution to other question please post as adifferent question.