Answer: a. Qs=20, Qd=70
b. P=$2300, Q=50
Explanation:
a. Supply function: [tex]p=40q+300[/tex]
Demand function: [tex]p=5300−60q[/tex]
When the price is $1100,
Supply=[tex]P= 40q+300 1100=40q+300 800=40q 20=qs[/tex]
Therefore, quantity supplied is 20 units.
Demand=[tex]P= 5300 - 60q
1100=5300-60q
60q=5300-1100
60q=4200
qd=70[/tex]
therefore, quantity demand is 70 units.
b. Equilibrium is given by demand = supply
[tex]\frac{P-300}{40} =\frac{5300-P}{60} 6P-1800=21200-4P 10P=23000 P=$2300[/tex]
Substituting P into the supply equation we get,
[tex]p=40q+300 2300=40q_300 2000=40q 50=q[/tex]
Therefore, equilibrium price is $2300 and quantity is 50 units.
