Suppose the demand and supply curves of coffee are given by:
qD = 1,500 + p
qS = 500 + 2p
Calculate equilibrium quantity.
Answer & explanation
Correct answer: option 2
The correct answer is Option 2: 2500
At equilibrium, market supply = market demand. Equating them, we get
1500+p = 500+ 2p
1500-500 = 2p - p
1000 = p
Putting p = 1000 in any equation, we get q = 1500+p = 1500+1000 = 2500.
So equilibrium quantity is 2500.