Question

(b) The demand function for a commodity is D= 27 - 2p and the supply function for the commodity is p = 3 + S. Find the equilibrium price,
where D is demand and S is supply.
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Answer 1

The equilibrium market price in this case is 10.

Explanation:

We know,that in Microeconomics,market equilibrium where the overall demand in the market is equal to the total supply level of any particular good or service.Now,in this example,the demand function is given as D=27-2p and the supply function is denoted as p=3+S or p-3=S where D,S and p stand for Demand and Supply and market price respectively.

Therefore,based on the market equilibrium condition,we can state:-

$27-2p=p-3$

$-2p-p=-27-3$

$-3p=-30$

$p=-30/-3$

$p=10$

Therefore,based on the above calculations,the equilibrium market price is 10.