If the demand function is Qd = 600 - 50P, and the supply function is Qs = - 400 + 150P, calculate the shortage or surplus at a price of $4. Typing only the words shortage or surplus is insufficient, you also need to enter the size of the shortage or surplus.

There will be a shortage of 200 units at price of $4.

Explanation:

The demand function is given as,

Qd = 600 - 50P.

The supply function is given as,

Qs = - 400 + 150P

The equilibrium price will be where both quantity demanded and quantity supplied will be equal.

Qd = Qs

600 - 50P = - 400 + 150P

1000 = 200P

P = $5

Putting the value in demand function

Qd = 600 - 50 * 5

Q = 350

The equilibrium quantity is 350 units.

At price $4, the quantity supplied will be,

= - 400 + 150 * 4

= 200

The quantity demanded will be

= 600 - 50 * 4

= 400

The quantity demanded is greater than the quantity supplied. This implies that there is a shortage in the market.

The shortage in the market will be

= Qd - Qs

= 400 - 200

= 200

There is a shortage of 200 units.