Suppose that the inverse demand for cotton is P150 Qd where

Suppose that the inverse demand for cotton is P-150- Qd, where P is the price of cotton in USD/lb, and Qd is the quantity demanded of cotton in 1000 lbs. Suppose that the inverse supply for cotton is P -30+ Qs. The equilibrium price is equal to (USD/lb) and the equilibrium quantity is equal to (1000 lbs). 60,90 O 50, 50 O 100, 50 O 90,60

Solution

Inverse demand function, P= 150-Qd . Now, write it in other form , Qd = 150- P.

Inverse supply function , P= 30 + Q\'s . Now, write it in other form , Qs = P - 30.

For equilibrium price and quantity , equate Qs with Qd.

Qd = Qs

150 - P = P -30

150 +30 = 2P

180 = 2P

P = 90. {Equilibrium price}

Now ,put P= 90 in any of the quantity equation, we get,

Q = 90- 30

Q= 60. {Equilibrium quantity }

Hence, option (D) is correct . {90,60} .