assume that demand for a commodity is represented by the equation Qd=185-20p and supply by the equation Qs=85+30p,where Qd and Qs are quantity demanded and supplied,respectively.Using the equilibrium condition Qs=Qd,solve the equation to determine equilibrium price and quantity.Graph the two equations to substantiate your answer

Expert Answers

An illustration of the letter 'A' in a speech bubbles

The demand for the commodity is represented by the equation Qd=185-20p and the supply for the commodity is represented by the equation Qs=85+30p,where Qd and Qs are quantity demanded and supplied, respectively and p is the price. At equilibrium, the condition Qs=Qd holds. This can be used to determine the equilibrium price and quantity.

If Qs = Qd, 185 - 20p = 85 + 30p

or 185 - 85 = 20p + 30p

or 100 = 50p

or p = 2

Substituting the price p = 2 in the equation for Qs = 85 + 30p gives, Qs = 85 + 60 = 145. Substituting p = 2 in the equation Qd = 185 - 20p gives 185 - 20*2 = 185 - 40 = 145.

The equilibrium price is p = 2 and the equilibrium quantity is 145.

Approved by eNotes Editorial Team