Question

Consider a market for fish whose market demand and market supply for fish is specified as Qd = 300 - 2.5 P and Qs = - 20 + 1.5 P respectively. Solve for equilibrium price and quantity either through algebra (show your work) or setting up a table with values for P, Qd and Qs.

Answer 1

Equilibrium Price = 80

Equilibrium Quantity = 100

Equilibrium Supply = 100

Step-by-step explanation:

Given:

Qd = 300 - 2.5 P --------------Equation 1

Qs = - 20 + 1.5 P ---------------Equation 2

We know that on equilibrium, Qd = Qs

So,

300 - 2.5 P = - 20 + 1.5 P

300 + 20 = 1.5 P + 2.5 P

320 = 4 P

320/4 = P

80 = P

Put value of P in Equation 1

Qd = 300 - 2.5 P

Qd = 300 - 2.5 (80)

Qd = 300 - 200

Qd = 100

Put value of P in Equation 2

Qs = - 20 + 1.5 P

Qs = -20 + 1.5(80)

Qs = -20 + 120

Qs = 100