Market Demand and market supply equations are given as:
qD = 200 – p
qS = 120 + p
Equilibrium price and quantity are?
Answer & explanation
Correct answer: option 3
The correct answer is option 3: 40, 160
Step 1: Solve for equilibrium price
Equating Qd and Qs, we get Equilibrium Price
200 – p = 120 + p
200 – 120 = p + p
80 = 2p
40 = p
Thus, Equilibrium Price = 40
Step 2: Find equilibrium quantity
Substituting p=40 in the demand equation:
Qd =200 – p
= 200 – 40
= 160
Thus, the equilibrium price is 40, and the equilibrium quantity is 160.