Answer to Question #292773 in Microeconomics for Bhawna

Question

Market research has revealed the following information about the market for chocolate

bars: The demand schedule can be represented by the equation QD = 1,600 – 300P, where

QD is the quantity demanded and P is the price. The supply schedule can be represented by

the equation QS = 1,400 + 700P, where QS is the quantity supplied. Calculate the equilibrium

price and quantity in the market for chocolate bars.

Answer 1

Equilibrium Quantity and Price.

At equilibrium, the quantity demanded is equal to the quantity supplied.

$Q_d=1600-300P$

$Q_s=1400+700P$

$1600-300P=1400+700P$

collecting like terms together we have;

$1600-1400=700P+300P$

$200=1000P$

At equilibrium, the Price $\bold{P=0.20}$

with the equilibrium price, we substituted in the quantity demanded or supplied function to get the amount of quantity demanded at equilibrium.

$Q_d=1600-300(0.2)=1540$

$Q_s=1400+700(0.2)=1540$

Therefore the quantity at equilibrium is 1540.