Answer to Question #280771 in Microeconomics for JAMES

Question

Given that Q_d= -266p+3550 and Q_s=(-1*(-240p))+1526 [10 marks]Determine the equilibrium price and quantity and hence draw and label the equilibrium diagram.  

Answer 1

The equilibrium will be at the point where the demand is equal to the supply

$-266p+3550=240p+1526\\[0.3cm] 506p=2024\\[0.3cm] p^*=\dfrac{2024}{506}=\boxed{\$4}$

The equilibrium quantity is equal to

$Q=-266(4)+3550\\[0.3cm] Q^*=\boxed{2486}$

The figure below shows the demand and supply curves and the equilibrium point