Question

ADVANCED ANALYSIS Assume that demand for a commodity is represented by the equation P=110−3Qd. Supply is represented by the equation P=−10+3Qs, where Qd and Qs are quantity demanded and quantity supplied, respectively, and P is price. Instructions: Round your answer for price to 2 decimal places and enter your quantity as a whole number. a. Using the equilibrium condition Qs = Qd, determine equilibrium price. b. Now determine equilibrium quantity.

Answer 1

Answer:

(a) 50

(b) 53.33 units

Step-by-step explanation:

For demand equation

P=110-3Qd

3Qd=110-P

Qd=110/3-P/3

For supply equation

P=-10+3Qs

3Qs=P+10

Qs=P/3+10/3

At equilibrium, Qs=Qd hence

P/3+10/3=110/3-P/3

P+10=110-p

2P=100

P=50

Therefore, equilibrium price is 50

(b)

To obtain equilibrium quantity, then we substitute the value of P into the equation of quantity hence

Qd=110/3-P/3

Qd=110/3-50/3=53.33 units