Answer: Price - $20 , Quantity = 4 units
Explanation: Equilibrium in a goods market occurs when demand for a good is equal to its supply. It is given by,
[tex]Q_{xd}=Q_{xs}[/tex]
where,
[tex]Qx_{xd} = 14 - \frac{1}{2}P_{x}
Qx_{xs} = \frac{1}{4} P_{x} - 1[/tex]
So, we have
[tex]14 - \frac{1}{2}P_{x} = \frac{1}{4} P_{x} - 1[/tex] 15 = \frac{3}{4} Px_{x}
60 = 3 P_{x}
20= P_{x}[/tex]
Equilibrium price is $20.
Equilibrium quantity is [tex]Q= 14 - \frac{1}{2} P_{x} Q= 14 - 10 Q= 4[/tex]
Equilibrium quantity is 4 units.
