A first year student in economics analyzed the demand and supply for cups of tea at a staff canteen in summer and found out that QD = 582 - 138P and QS = 62 + 5P. Where QD = Quantity of cups of tea demanded QS = Quantity of cups of tea supplied P = price. The equilibrium price is R_______.
The equilibrium price occurs where quantity demanded equals quantity supplied, so we can set QD = QS:
582 - 138P = 62 + 5P
520 = 143P
P = 520/143
P = 3.64
Therefore, the equilibrium price is R3.64.