Question on: SS1 Economics - Determinants of Equilibrium Price, Quantity And Point With Simple Applications
Word problem:
If the demand function is Qd = 60 - 2p and the supply function is Qs = 20 + 4p, what is the equilibrium level of quantity and price?
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To find the equilibrium quantity and price, we need to set the quantity demanded (Qd) equal to the quantity supplied (Qs) and solve for p (price) and then substitute p back into either the demand or supply equation to solve for Q (quantity).
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Set Qd = Qs: 60 - 2p = 20 + 4p
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Solve for p: 60 - 20 = 4p + 2p 40 = 6p p = 40/6 = 6.67
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Solve for Q: Substitute p = 6.67 into either the demand or supply equation. Let's use the demand equation: Q =
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