Answer to Question #171001 in Microeconomics for Jackson Geiser

Question

The demand product is P=400-10Qd and the supply is P=200+10Qs. What is the price elasticity I’d demand for this product when the market is in equilibrium?

Answer 1

Market equilibrium occurs when $P_d=P_s$:

$400-10Q_E=200+10Q_E,$ $200=20Q_E,$ $Q_E=10.$

Then we can find equilibrium price:

$P_E=400-10\cdot10=\$300.$

We can find the elasticity of the demand when the market is in equilibrium as follows:

$E_d=-(\dfrac{1}{slope})\dfrac{P}{Q_d},$ $E_d=-(\dfrac{1}{-10})\dfrac{300}{10}=-3.0.$