Question Two : Given the following equations ; QS = 50P - 1000 & QD = 1800 - 20P a

Economics Jan 26, 2021

Question Two : Given the following equations ; QS = 50P - 1000 & QD = 1800 - 20P a. Calculate the equilibrium level of price and quantity. b. Show the demand and supply schedule.

Expert Solution

a) Computation of Equilibrium Level of Price and Quantity:

At Equilibrium ,

Quantity Demanded (Qd) = Quantity Supply (Qs)

50P - 1000 = 1800 - 20P

50P+20P = 1800+1000

70P = 2800

P = 2800/70

P = 40

So, Equilibrium Price is $40.

Qd = 1800 - 20P

= 1800 - 20*$40

= 1800 - $800

Qd = 1000

So, Equilibrium Quantity is 1000.

b) Demand and Supply Schedule:

Qs = 50P - 1000

Qd = 1800 - 20P

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