Question

Demand Curve: P=300-Qd

Supply Curve: P=30+2Qs

What is the equilibrium price? What is the equilibrium quantity?

Answer 1

In order to find the equilirbium price and quantity we must first put the demand and supply equations as equal to each other.

Because in equilibrium, demand is equal to supply.

Therefore,

300 - Q= 30 + 2Q

(note that we have dropped Qd and Qs and have replaced them both with only Q because in equilibrium quantity supplied is same as quantity demanded)

=> 3Q = 300 - 30

=> 3Q = 270

=> Q = 90

Thus, equilibrium quantity is 90 units.

To calculate the equilibrium price, replace the value of Q in either of the two equtions of demand and supply.

Therefore, P = 300 - Q

=> P = 300 - 90

=> P = 210

Thus, equilibrium price is 210 and equilibrium quantity is 90.