Question

A market can be described by the equations qd = 75 - 5p and qs = 20p. What are the equilibrium price and quantity in this market?

Answer 1

The equilibrium price in this market is $3 and the equilibrium quantity is 60 units.

Step-by-step explanation:

To find the equilibrium price and quantity in this market, we need to set the demand and supply equations equal to each other:

qd = qs

75 - 5p = 20p

First, let's solve for the price (p):

75 - 5p = 20p

Combine like terms:

75 = 25p

Divide both sides by 25:

p = 3

Now, substitute the value of p back into one of the original equations to find the quantity:

qd = 75 - 5(3) = 75 - 15 = 60

Therefore, the equilibrium price is $3 and the equilibrium quantity is 60 units.