Given two substitute goods (X and Y) with demand and supply function; Qd = 7p – 12; Qs = 4p + 9. Find the magnitude of excess demand when p = ₦18

A. 303
B. 30
C. 114
D. 33

Correct Answer: Option D

D. 33

Explanation

To find quantity demanded when p = ₦18
Qd = 7p – 12
7(18) – 12
126 – 12
Qd = 114units
To find quantity supplies at ₦18
Qs = 4p + 9
4(18) + 9
Qs = 72 + 9
Qs = 81 units
To find the magnitude of excess demand
Excess demand = 114 – 81 = 33 units