Question

Demand and supply functions of a commodity are given respectively as quantity demanded 40 at 400, quantity supply 120 naira per 24 unit. Determine the equilibrium of quantity bought

Answer 1

$Q_d=(400,0), (0,40)$

$Demand function= y=x-mx$

$m=\frac {(400-0)} {0-40}=-10$

x= 40 ( Y intercept)

$Q_d=40-10P$

$Q_s=(0,120), (24,0)$

$Supply function= y=x+mx$

$m=\frac {(24-0)} {0-120}= 0.2$

$Q_s=24+0.2P$

At Equilibrium, $Q_d=Q_s$

40-10P=24+0.2P

10.2P=16

P=1.6

Equilibrium Quantity

$40- (10\times1.6)=24$