Answer to Question #273847 in Economics of Enterprise for Eid

Question

Demand and supply function in amarket are described by the equations

a) find the equilibrium prices and quantities (P,EQ & EQa)

b) show your answer using by graph

Answer 1

QD = Quantity demanded

QS = Quantity supplied

 P = Price

Condition: At the equilibrium point quantity demanded equals to the quantity supplied.

QD = QS

By substituting demand and supply formula to the given example equilibrium quantity and price can be calculated.

Demand formula QD = a- bp

Supply formula QS = a + bp