Question

Suppose the demand and supply of tea are modeled by the two following functions: Q = 42P + 37 Q = -19P + 532 What is the equilibrium price of tea? Round your answer to two places after the decimal point (0.01).

Answer 1

The equilibrium price of tea is approximately $8.11 per unit.

Step-by-step explanation:

The equilibrium price of tea can be found by setting the demand and supply functions equal to each other and solving for the price.

Q = 42P + 37

Q = -19P + 532

To find the equilibrium price, we need to set the two quantities of tea (Q) equal to each other:

42P + 37 = -19P + 532

Combine like terms:

61P = 495

Divide both sides by 61:

P ≈ 8.11

So, the equilibrium price of tea is approximately $8.11 per unit.

In this context, equilibrium price refers to the price at which the quantity demanded by consumers is equal to the quantity supplied by producers. At this price, there is no shortage or surplus of tea in the market.

Therefore, the equilibrium price of tea is approximately $8.11 per unit.