Use the information below to answer this question. Given that Q d = 20 - 4P and Q = 6P + 12If price is increased to N3, how much is the excess supply?

Answer Details

To determine the excess supply, we need to compare the quantity demanded (Qd) with the quantity supplied (Qs) at the given price. First, we need to find the equilibrium price, where Qd = Qs: Qd = 20 - 4P Qs = 6P + 12 Setting Qd equal to Qs and solving for P, we get: 20 - 4P = 6P + 12 8P = 8 P = 1 So the equilibrium price is N1. Now, if the price is increased to N3, we can find the new quantity demanded and supplied: Qd = 20 - 4P = 20 - 4(3) = 8 Qs = 6P + 12 = 6(3) + 12 = 30 At the new price of N3, the quantity demanded is 8 and the quantity supplied is 30. Since the quantity supplied is greater than the quantity demanded, we have excess supply. To find the amount of excess supply, we subtract the quantity demanded from the quantity supplied: Qs - Qd = 30 - 8 = 22 Therefore, the excess supply at the new price of N3 is 22.