Question

Consider the following inverse demand and supply functions: P=40−2Q and P=20+21Qₛ. Find the cquilibrium price (P) and equilibrium quantity (Q) P ______, Q________________

Answer 1

The equilibrium price (P) is $2 and the equilibrium quantity (Q) is 12.

Step-by-step explanation:

To find the equilibrium price and quantity, we need to set the demand and supply equations equal to each other.

The demand equation is P = 40 - 2Q and the supply equation is P = 20 + 21Qs.Solving for P, we get P = 40 - 2Q = 20 + 21Qs.Substituting the value of P from one equation into the other, we can solve for Q.Therefore, the equilibrium price is $2 and the equilibrium quantity is 12.