Suppose the demand and supply curves of salt are given by:
$Qd= 1000-p$
$Qs = 700 + 2p$
Find the equilibrium price and quantity.
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Equilibrium price = 100, Equilibrium Quantity = 900
Given,
$Qd= 1000-p$
$Qs = 700 + 2p$
At equilibrium, Qd = Qs
1000-p = 700 + 2p
3p = 300
p = 100
Substituting, p = 100 into either equation to find equilibrium quantity:
$Qd$= 1000 - 100 = 900
Equilibrium price = 100, Equilibrium quantity = 900