Question

Assume the supply and demand functions for a manufacturing company are:

Supply: p= 2/3q-250 Demand: p= -4/3q + 750
where p is the price per unit in dollars and q is the quantity in units. Find the equilibrium quantity.
O 1,000
750
O250
O 100
O 500

Answer 1

500.
The equilibrium quantity is the number that makes the values for supply and demand equal. To solve for this set the expressions equal to each other and solve for q. 2/3q-250=-4/3q+750. Take -250 to the other side by adding 250 to both sides. Then take -4/3 to the other side by adding 4/3. 6/3q=1000. 2q=1000. Divide 1000 by 2. 500. Q=500. This means that at 500 units the supply and demand functions are equal.