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Quantity supplied Qs=100+3P and quantity demanded Qd=400โ€“(2P+T) where T=taxes=15. Determine the equilibrium price & quantity.

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Equilibrium is conditions of quantity and price that make up the natural resting state of the market. The market seeks equilibrium because it is the solution to the interaction of market supply and market demand.

At equilibrium, the quantity supplied (Qs) and the quantity demanded (Qd) will be equal under a specific price (P). That is, there is not excess supply or demand, and the market has therefore met its natural resting state. Thus, equilibrium is solved by setting Qs=Qd and then finding that equilibrium quantity and price. This is the necessary condition and will always be true at equilibrium. The problem is then solved according to what equations and information you are given.

Of course, this is a simplification, and there are many other market variables that can change the equilibrium conditions. In this problem, taxes (T) are introduced as a variable. So, we solve the problem by setting Qs=Qd and then plugging in our variable T which we are given as T=15.

Qs = Qd

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