Question

Suppose demand and supply are given by qxd = 14 - (1/2)px and qxs = (1/4)px - 1 instructions: enter your responses rounded to the nearest whole number.
a. determine the equilibrium price and quantity. show the equilibrium graphically. equilibrium price: $

Answer 1

Answer: Equilibrium price is $20 and equilibrium quantity is 4 units.

Explanation: Equilibrium is a situation of rest, a situation where demand for a good is equal to its supply. The price that balance demand and supply is known as the equilibrium price.

$Q_{xd} = 14 - \frac{1}{2} P_{x}\\Q_{xs} = \[tex]Q_{xd} = Q_{xs} 14 - \frac{1}{2} P_{x} = \frac{1}{4} P_{x} - 1 14 + 1 = \frac{1}{4} P_{x} + \frac{1}{2} P_{x} 15 = \frac{3}{4} P_{x} 20 = P_{x}$[/tex] =  Equilibrium price

Equilibrium quantity is given by,

$Q_{xd} = 14 - \frac{1}{2} P_{x} = 14 - \frac{1}{2} * 20= 14 - 10= 4$