Question

Given the following equations:
Qs=-32+7P
Qd = 128-7P
Evaluate Equilibrium Price,P_e

Answer 1

At equilibrium, quantity demanded = quantity supplied and also price is equal.

Quantity supplied and quantity demanded :

Equation.

Qs = 7p - 32

Qd = - 9p + 128

At equilibrium :

Qs = Qd

Doing the substitution :

7p - 32 = - 9p + 128

Solving for p:

7p + 9p = 128 + 32

16p = 160

p = 160/16 = 10

The equilibrium quantity is :

7 × 10 - 32 = 70 - 32 = 38

The equilibrium :

Price = 10

Quantity = 38

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