Word problem If the demand function is Qd 60 - ... - SS1 Economics Determinants of Equilibrium Price, Quantity And Point With Simple Applications Question

Solution:

To find the equilibrium level of quantity and price, we need to set the demand function equal to the supply function and solve for Q and p:

Qd = Qs

60 - 2p = 20 + 4p

60 - 20 = 6p

40 = 6p

p = 40/6 = 6.67

Now that we have the value of p, we can substitute it into either the demand or supply function to find the equilibrium quantity:

Qd = 60 - 2p = 60 - 2(6.67) = 46.67

Qs = 20 + 4p = 20 + 4(6.67) = 46.68

The equilibrium level of quantity is approximately 46.67 units and the equilibrium price is approximately $6.67 per unit.