The supply function for the production of good A is P=50+45Q. The demand function is P= 100-5Q. Find the equilibrium price and quantity.
At PQe supply equals demand so we set equations equal to each other and solve as symoltaneous equations: 50+45Q=100-5Q
then 50Q=50
so Qe=1.
By plugging Q=1 into our supply function we get PQe=95.
PK
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