Question

Suppose that the supply of lemonade is represented by: QS = 40P where Q is measured in pints and P is measured in cents per pint.

Answer the following questions:
1- If the demand for lemonade is QD = 5,000 − 10P, what is the current equilibrium price and quantity?

Answer 1

The equilibrium price for lemonade is 100 cents per pint, and the equilibrium quantity is 4,000 pints. This is found by equating the demand and supply equations and solving for the price, which is then used to find the quantity.

Step-by-step explanation:

To find the equilibrium price and quantity for lemonade, we set the demand function, QD = 5,000 − 10P, equal to the supply function, QS = 40P. The resulting equation to solve is: 5,000 − 10P = 40P

Adding 10P to both sides and then dividing by 50P gives us: P = 100

Using P = 100, we can calculate the equilibrium quantity by substituting P back into either the supply or demand equation. We get: QS = 40P = 40(100) = 4,000 pints

Therefore, the equilibrium price is 100 cents per pint, and the equilibrium quantity is 4,000 pints.