The demand function has the form: Qd = 100 – 4P. The offer function is given as Qs = 10 + 2p.
July 29, 2021 | education|
The demand function has the form: Qd = 100 – 4P. The offer function is given as Qs = 10 + 2p. Calculate the correct answer, which shows the price, volume of goods sold and the seller’s revenue, provided that the market is in equilibrium.
The main condition for equilibrium in the market is the equality Qd = Qs. This allows us to find the equilibrium price P.
100-4P = 10 + 2p; 90 = 6p; p = 15 monetary units. To find the equilibrium volume, we substitute it into any of the equations. Qd = Qs = 10 + 2 * 15 = 10 + 30 = 40 units. To find the seller’s revenue, multiply the found volume of the goods sold and the found equilibrium price. Y = Qs * p = 40 * 15 = 600 monetary units
Answer: p = 15 monetary units, Q = 40 units, Y = 600 monetary units.
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