Question

The market demand function for ice cream cones is Qd = 17 – 5P. The market supply function for ice cream cones is QS = 8P – 25 a. What is the equilibrium price in the market for ice cream cones? Instructions: Round your answer to 2 decimal places. $ . b. What is the equilibrium quantity in the market for ice cream cones? Instructions: Round your answer to the nearest whole number. .

Answer 1

At the equilibrium the price and the quantity supplied and quantity demanded are equal.

So we get Qd=Qs

17 - 5P = 8P - 25

= 17 + 25 = 8P + 5P

= 42 = 13P

P = 3.23.

After solving the equation we have the equilibrium price as $3.23. Using the value in other equation to get the equilibrium quantity.

Qd = 17 - 5 (3.23)

= 17 - 16.15

= 0.85.

Using the same value in other equation to cross check the answer we get

Qs = 8P - 25

= 8 (3.23) - 25

= 25.84 - 25

= 0.85.

The equilibrium quantity at the equilibrium price is 1(rounded to nearest whole number).