Suppose the market demand and supply are given by Qs = -50 + 3P and Qd = 300 - 4P. What is the equilibrium price?
? is the answer 50
Set the two equations = to each other since this is equilibrium. Solve for P.
Your answer is correct.
To find the equilibrium price, we need to equate the market supply and demand equations. In other words, we need to solve for the price (P) at which the quantity supplied (Qs) equals the quantity demanded (Qd).
Given:
Qs = -50 + 3P (Supply equation)
Qd = 300 - 4P (Demand equation)
Setting Qs equal to Qd:
-50 + 3P = 300 - 4P
Now, let's solve for P:
Add 4P to both sides: -50 + 3P + 4P = 300 - 4P + 4P
Combine like terms: 7P - 50 = 300
Add 50 to both sides: 7P - 50 + 50 = 300 + 50
Combine like terms: 7P = 350
Divide both sides by 7: 7P / 7 = 350 / 7
Simplify: P = 50
Therefore, the equilibrium price is P = 50.