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The market demand function and market supply functions are given as, Find the equilibrium price and equilibrium quantity. qD = 200 – P for 0 = P = 200 qS = 120 + P for P > 10 |
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Answer» We nd equilibrium price by equating market demand function and market supply functions as shown below qD = qS 200-P = 120 + P 2P = 80 P = 80/2 = 40 Therefore equilibrium price is ₹40. Equilibrium quantity is obtained by substituting the equilibrium price into either the demand or supply function equations. Applying the value of price ₹40 in demand equation we have. qD = 200 – P qD =200 – 40 = 160 Therefore equilibrium price is ₹40 and equilibrium quantity is 160. |
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