Question

Given the demand for a product as Qd = 100 – 5p and the supply as Qs = -20 + 3p, you are told equilibrium is obtained at the point where Qd = Qs. The equilibrium price for the product is

Answer 1

Answer:

q = 25

Explanation:

At equilibrium: Quantity demanded (Qd) = Quantity supplied (Qs)

Quantity demanded = 100 – 5p

Quantity supplied = -20 + 3p

Therefore:

100 – 5p = -20 + 3p

100 + 20 = 3p + 5p

120 = 8p

$p = \frac{120}{8} = 15$

Equilibrium price (p) = 15

Substitute in the demand or supply function to derive equilibrium quantity:

100 – 5p

100 – 5(15) = 100 – 75 = 25

Equilibrium quantity of the product (q)= 25