Question

Suppose demand for a product is given by the equation Qd = 120 -4P and supply for the product is given by the equation Qs = 4P

(a) Find the equilibrium price and equilibrium quantity in this market.

Answer 1

The equilibrium price is $15 and the equilibrium quantity is 60 units.

Step-by-step explanation:

To find the equilibrium price and equilibrium quantity in this market, we need to find the point where the demand and supply curves intersect. Let's set the demand equation, Qd = 120 - 4P, equal to the supply equation, Qs = 4P. This gives us:

120 - 4P = 4P ⇒ 120 = 8P ⇒ P = 15

Substituting P = 15 into either equation to find the equilibrium quantity, we use the supply equation Qs = 4P which results in Qs = 4(15) = 60. Therefore, the equilibrium price is $15 and the equilibrium quantity is 60 units.

Therefore, the equilibrium price is $15 and the equilibrium quantity is 60 units.