Answer to Question #258378 in Microeconomics for Tony

Question

Given the demand and supply function below: q=40-P and q=6P

Find the equilibrium price and quantity

Answer 1

Solution:

At equilibrium: Qd = Qs

40 – P = 6P

40 = 6P + P

40 = 7P

P = 5.7

Equilibrium price = 5.7

Substitute in the demand function to derive the equilibrium quantity:

Qd = 40 – P

Qd = 40 – 5.7

Qd = 34.3

Equilibrium quantity = 34.3