Question

If the market demand function is given by P = 80 - 0.3Q and the market supply is given by P = 20 + 0.1Q, then the equilibrium price and quantity are:

Answer 1

The equilibrium price and quantity for the given market demand and supply functions are $35 and 150 units respectively, calculated by setting the two functions equal to each other and solving for Q and then P.

Step-by-step explanation:

The student is asking to find the equilibrium price and quantity when the market demand function is given by P = 80 - 0.3Q and the market supply is given by P = 20 + 0.1Q. To find the equilibrium, we set the demand function equal to the supply function and solve for Q:

80 - 0.3Q = 20 + 0.1Q

Adding 0.3Q to both sides and subtracting 20 from both sides, we get:

60 = 0.4Q

Thus, Q = 150. Now, we can plug this value back into either the demand or supply equation to find the equilibrium price P. Using the demand function:

P = 80 - 0.3(150)

P = 35

Therefore, the equilibrium price and quantity are $35 and 150 units respectively.