Homework SourseConsider a market characterized by the following demand and
Consider a market characterized by the following demand and supply conditions: Px=100-5Qx and Px=20+3Qx. The equilibrium price and quantity are, respectively:
A: $50 and 10 units
B: $10 and 50 units
C: $25 and 5 units
D: $5 and 25 units
Consider a market characterized by the following demand and supply conditions: Px=100-5Qx and Px=20+3Qx. The equilibrium price and quantity are, respectively:
A: $50 and 10 units
B: $10 and 50 units
C: $25 and 5 units
D: $5 and 25 units
A: $50 and 10 units
B: $10 and 50 units
C: $25 and 5 units
D: $5 and 25 units
Solution
Given, demand curve Px=100-5Qx and Supply curvePx=20+3Qx
Market equilibrium is attained where market demand is equal to market supply. That is
100-5Qx =20+3Qx
80=8Qx
Qx=10 units
subsituting this quantity in supply equation,
Px=20+3(10)
Px=$50
The equilibrium price and quantity are, $50 and 10 units respectively. Option A.
