Suppose the market for oranges has the following demand and

Suppose the market for oranges has the following demand and supply functions:

• QD= 700 – 100P
• QS = 200 + 150P

Using these supply and demand functions, how many oranges will be sold in equilibrium?

a)100 oranges

b)250 oranges

c)50 oranges

d)500 oranges

Solution

Equilibrium is when QD = QS.

700-100P = 200 +150P

700-200 = 150P +100P

500 = 250P

P =2

QS = 200 + 150(2) = 200+30 = 500 oranges.

500 oranges will be sold in equilibrum. Therefore, option(d) is the correct answer.