Final answer:
You can solve the problem graphically by plotting the demand and supply curves on the same graph. By analyzing the intersection point, you can find the price and quantity at equilibrium.
Step-by-step explanation:
Solving Models with Graphs
If algebra is not your forte, you can get the same answer by using graphs. Take the equations for Qd and Qs and graph them on the same set of axes. Since P is on the vertical axis, it is easiest if you solve each equation for P. The demand curve is then P = 8 -0.5Qd and the supply curve is P = -0.4 +0.2Qs. If you draw the graphs carefully, you will see that where they cross (Qs = Qd), the price is $2 and the quantity is 12, just like the algebra predicted.