Answer to Question #317187 in Economics of Enterprise for Kristen

Question

supply are given by the equations:

Qd= 2000 – 400P + 0.5I +150Pb

Qs= -516 + 300P – 60W

where Qd and Qs is quantity of tourist e-book guides demanded and supplied, P is the price of a tourist e-book guide, I is household income, W is wage rate paid to tourist book guide laborers, and Pb is the price of a hardbound tourist book guide. Assume I is Php 2,300, W is Php10, and Pb is Php 21.40. Determine the equilibrium price and quantity of tourist e-book guides in this local market. Show your solution.

Answer 1

$Let us take Q_{d}=Q_{s}$

$Q_{d}=2000-400p+0.5\times I+150\times pb$

$Q_{d}= 2000-400p + 0.5\times2300 + 150\times21.40$

$Q_{d}= 6360-400p$

$Q_{s} =-516+300p -60\times W$

$Q_{s} = -516+300p -60\times10$

$Q_{s} = - 516+300p - 600$

$Q_{s} = -1116+300p$

$isolate the variable P$

$Since, Q_{d}=Q_{s};$

$6360-400p= -1116+300p$

$6360+1116=400p+300p$

$7476=700p$

$\frac{7476}{700p}=10.68$

$p=10.68$

$equilibrium price =10.68$

quantity of tourist e-book guides in this local market

$6360-400\times p$

$6360-400\times10.68$

$6360-4272$

$Quantity= 2088$