Question

The demand function of a firm is given by : 4P +Q- 16 = 0
and the market supply function is - 6P = - 2Q + 10 form:
Find the equilibrium price and equilibrium quantity.​

Answer 1

The equilibrium price and quantity are 1.57 and 9.71 respectively.

Explanation:

In Microeconomics,the equilibrium condition in any market is established by the equality between the market demand and supply.Here,the demand function is given as 4P+Q-16=0 which can be rewritten as Q=16-4P and the supply function in denoted as -6P=-2Q+10 which can also be rewritten as Q=5+3P where Q denotes the quantity of output and P stands for the output price in the market.

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

$16-4P=5+3P$

$-4P-3P=-16+5$

$-7P=-11$

$P=\frac{-11}{-7}$

$p=1.57$ approximately

Now,plugging the value of P in the supply function,we get:-

$Q=5+3P$

$Q=5+3(1.57)$

$Q=5+4.71$

$Q=9.71$ approximately

Hence,the equilibrium price and quantity in the market are 1.57 and 9.71 respectively.