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
Related Economics IB answers
All answers ▸Evaluate the effects of a price ceiling on the housing market
Evaluate the effectiveness of monetary policy to increase AD during a recession
Explain the difference between expansionary and contractionary fiscal policies
Is a firm earning abnormal profits in perfect competition productively and allocatively efficient?