Demand is described by P6002Q and supply described by P1201Q

Demand is described by P=60-0.2Q and supply described by P=12+0.1Q in a perfectly competitive market. Calculate the quantity traded there is a price floor of 35.

Solution

At Price Floor of 35

35=60-.2*Qd

Qd=Quantity demanded = (60-35)/.2 = 125

Also,

35=12+.1Qs

Qs= Quantity supplied = (35-12)/.1 = 230

Thus, at price floor of 35, demand of product will be 125 but supply of product will be 230. It creates a surplus of product supply = 230-125 = 105.