Answer to Question #168365 in Economics of Enterprise for Daniel Asante

Question

Let demand equal: P = 10 – 0.2Qd. Supply is denoted as: P = 2 + 0.2Qs. Assume that Qd is quantity demanded and Qs is quantity supplied.

Answer 1

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$Given ;\\ demand \ equation:P=10-0.2Qd\\ supply\ equation \ :P=2+0.2Qs\\ equilibrium\ price\ and \ quantity \ can\ be\ determined \ as \ follows:\\$

$at\ equilibrium\ , \ Qd=Qs\\$

$10-0.2Q=2+0.2Q\\ 10-2=0.2Q+0.2Q\\ 8=0.4Q\\ Q=\frac{8}{0.4}\\ Q=20$

Quantity at equilibrium is $20$ units.

The price at equilibrium is got by substituting $Q$ in one of the equations :

$P=2+0.2Q\\ P=2+(0.2\times 20 )\\ P=2+4\\ P=6$

The price at equilibrium is $\$6$ .