Question

1 Given a market demand curve is Qd = 200 – 2P and the equation for a market supply curve is Qs = 50 + 3P, calculate the market equilibrium price and quantity. (5)

Answer 1

$1. Equilibrium price$

$200-2P = 50+3P$

$200-50 = 3P + 2P$

$150 = 5P$

$P = \frac{150}{5} = 30$

Equilibrium price = 30

$2. Equilibrium quantity$

$Qd = 200-2P$

$= 200-2(30)$

$= 200-60 = 140$

Equilibrium quantity = 140