Question

Assume that demand for a commodity is represented by the equation P=10−0.2Qd. Supply is represented by the equation P=2+0.2Qs, where Qd and Qs are quantity demanded and quantity supplied, respectively, and P is price. Instructions: Enter your answers as whole numbers.
Required:
a. Using the equilibrium condition Qs = Qd, determine equilibrium price.
b. Determine equilibrium quantity.
c. Graph the two equations to substantiate your answers and label these two graphs as D1 and S1.

Answer 1

Answer:

Equilibrium price=6

Equilibrium quantity=20

Explanation:

P=10-0.2Qd

P-10= -0.2Qd

Qd=p-10/-0.2

Qd=-5p+50

P=2+0.2Qs

P-2=0.2Qs

Qs=p-2/0.2

Qs=5p-10

(a)

Qs=Qd

5p-10= -5p+50

5p-10+5p-50=0

10p-60=0

10p=60

p=6

Equilibrium price=6

Equilibrium quantity

Qd=-5p+50

=-5(6)+50

=-30+50

=20

Qs=5p-10

=5(6)-10

=30-10

=20

Equilibrium quantity=20

(c) Graph has been attached showing the equilibrium price and quantity