Suppose the market for agrochemicals has a supply
Sx=30+A and the demand curve of Dq=240-2q assume that the market is perfectly competitive what would the equilibrium price and quantity be?
Solution:
At equilibrium: Dq = Sx
240 – 2q = 30 + A
240 – 30 = A + 2q
210 = A + 2q
Divide both sides by 2:
105 = "\\frac{A}{2}" + q
q = 105 – "\\frac{A}{2}"
Equilibrium quantity = 105 – "\\frac{A}{2}"
Substitute in the supply function:
Sx = 30 + A
Sx = 30 + (105 – "\\frac{A}{2}")
A = 270 – 2S
Equilibrium price = 270 – 2S
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