Question

Given the supply function and inverse demand function, Qs = 40 + 20 P and p=10-1/10Q

respectively. Determine the equilibrium price and quantity?

Answer 1

$\frac{40-Q}{20}=10-\frac{1}{10Q}$

$\frac{40-Q}{20}=10-0.1Q$

$\frac{40-Q-20(10-0.1Q)}{20}=0$

$\frac{-160+2Q}{20}=0$

Q=80

$Qs = 40 + 20 P$

$80= 40 + 20 P$

P=2

the equilibrium price and quantity is 2 and 80