Answer to Question #202837 in Macroeconomics for Ayanda

Question

If the equation for market demand curve is qd=100-0.5p and the equation for a market supply curve is Qs=-20+p, the market equilibrium price is?

Answer 1

Solution:

At equilibrium: Quantity demanded (Q_d) = Quantity supplied (Q_s)

Quantity demanded = 100 – 5p

Quantity supplied = -20 + p

Therefore:

100 – 5p = -20 + p

100 + 20 = p + 5p

120 = 6p

P = $\frac{120}{6} = 20$

The market equilibrium price (p) = 20