Question

Based on the given demand and supply equations where Q represents quantity supplied or demanded, and P represents the price in dollars, what is the equilibrium price for the commodity?

a) $10
b) $12.5
c) $25
d) $50

Answer 1

The equilibrium price for the commodity is approximately $71.43.

Step-by-step explanation:

To determine the equilibrium price for the commodity, we need to find the price at which the quantity demanded equals the quantity supplied. This is where the demand and supply curves intersect on a graph or where the demand and supply equations are equal.

Given the demand equation Q = 500 - 5P and the supply equation Q = 2P, we can set them equal to each other and solve for P:

500 - 5P = 2P

7P = 500

P = 500/7 = 71.43

So, the equilibrium price for the commodity is approximately $71.43.