Question

what is the gradient of tne ine 5x – 7y–14 2. Demand for a product is equal to 4500 – 0.75P, where P is the price of a unit. Supply of the product is 1000 + P. What is the equilibrium price and quantity?

Answer 1

Demand equation (Qd) = 4500 - 0.75P

Supply equation (Qs) = 1000 + P

For an equilibrium, demand equation is equal to supply equation.

So, plugging the equations together,

Q(d) = Q(s)

4500 - 0.75P = 1000 + P

3500 = 1.75P

P = 3500/ 1.75

P= 2000

So our equilibrium price is 2000

Now plugging the value in any equation ( either Q(d) or Q(s) ) we will get our equilibrium quantity.

So equilibrium quantity ehwn putting P = 2000 in Q(s) equation is:

Q(s) = 1000 + P

Q(s) = 1000 + 2000

Q(s) = 3000

So, equilibrium quantity is 3000