Answer to Question #289746 in Microeconomics for Tabis

Question

following are the demand and supply equations for a consumer good: (20)

Qd = 300,000/P (Qd = quantity demanded)

Qs = 30P (Qs = quantity supplied)

(P = Price)

Find the market clearing price and the quantity at the equilibrium. Also sketch the demand and supply curves.

Answer 1

At Equilibrium,

$Q_s=Q_d$

$\therefore 30P=\frac{300000}{P}$

$30P^2= 300000$

P= 100

Use either Equation to obtain Q

$Q_s=30P$

$Q_s=30\times 100=3000$

This information can be shown by the use of a diagram as below;