Answer to Question #315821 in Microeconomics for Pamela

Question

Use the following information to answer questions 1.2 to 1.4:

Suppose the demand for a product can be represented by Qd = 100 – 5P, while

the supply is given by the equation Qs = –12 + 3P, where price is in rand. Determine the equilibrium price and quantity

Answer 1

At equilibrium, demand equals supply,

Therefore, at equilibrium

$$Qd=Qs$$

$100-5P=-12+3P$

$100+12 = 5P+3P$

$112=8P$

Therefore, equilibrium price

=14 Rands.

$Qd=100-5(14) = 30$

$Qs=-12+3(14)=30$

Therefore, the equilibrium quantity is 30.