Quantity supplied Qs=100+3P and quantity demanded Qd=400–(2P+T) where T=taxes=15. Determine the equilibrium price & quantity
In an ideal market for any product the quantity supplied increases with the price of the product and the quantity demanded decreases with an increase in price. The opposite is true for a decrease in the price.
As the price of a product changes, the quantity supplied and the quantity demanded changes; when the two are equal a state of equilibrium is reached.
In the problem the quantity supplied is given by Qs = 100 + 3*P and the quantity demanded is given by Qd = 400 - (2*P + T) where T = 15. To determine the equilibrium price equate the two and solve for P. This gives: 100 + 3*P = 400 - (2*P + 15)
=> 100 + 3P = 400 - 2P - 15
=> 5P = 285
=> P = 57
The equilibrium price is equal to 57 and the equilibrium quantity is equal to 271.