Question

Suppose the demand function for a good is given as Qd=90 - 3 P and the supply function is given as Qs= 30 + 7P . If find the equilibrium quantity for the good also using a diagram explain for what price there will be an excess supply and excess demand for this good in the market.​

Answer 1

Explanation:

At equilibrium qd=qs

90-3p=30+7p

90-30=7p +3p

60 =10p

Divide both sides by 10

P=6

P 6 is equilibrium quantity for good if the price increses from 6 to7 then there is excess suply but if price decreses from 6 to 4 so there is excess demand in market.