Demand and Supply Equilibrium

Demand and Supply Equilibrium - supply equation). The...

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Thus, replace Qd with EQ . = - Qd 120 4Pd Demand = + Qs 150 3Ps Supply The demand equation and the supply equation can also be given as: = - Q 120 4P Demand : The (-ve) sign will tell you it is a demand equation = + Q 150 3P Supply : The (+ve) sign will tell you it is a supply equation a) To find Equilibrium Price (Ep) always assume = Qd Qs :- = Qd Qs - = + 120 4Pd 150 3Ps - = 30 7Ep - = 307 Ep - . = 4 29 Ep Since Ep is an absolute value remove (-ve) sign. Therefore, = . Ep $4 29 b) To find Equilibrium Quantity (E Q ) use the Equilibrium Price (Ep) or P calculated in part (a) and put it in any one of the initial two equations written above (use either Demand equation or
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Unformatted text preview: supply equation). The answers will be the same since = = Qd Qs EQ :-Lets use the demand equation =-Qd 120 4Pd to find = Qd EQ =- EQ 120 4Pd We know Pd = -4.29 (always use the actual value to calculate, not the absolute value) =- (- . ) EQ 120 4 4 29 = + . EQ 120 17 16 Sign changes when we multiply two negative numbers = . EQ 137 16 or 137 So form part (a) and (b) we can say that the equilibrium price (Ep) is $4.29 and equilibrium quantity (E Q ) is 137 units....
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Demand and Supply Equilibrium - supply equation). The...

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