Use the following general linear demand relation: where P is the price of good X,M is income,and is the price of a related good,R.Income is $100,000,the price of the related good is $20,and the supply function is Q_s = 150 + 5P.What is the equilibrium price?

Question

Quizplus · Accepted Answer

We can start by setting up the demand equation with the given values for M and R:
Q = 11eab534_69b9_eabd_9198_6545b4a584f8_TB2562_11
Q = 11(100000) - 11eab534_69b9_eabe_9198_9d8de8e59a5d_TB2562_11 + 2000
Q = 110000 - 20P + 2000
Q = 112000 - 20P
Next, we can substitute this demand equation into the supply equation and solve for P:
112000 - 20P = 150 + 5P
117000 = 25P
P = 4680
P = 1872
P = $25
Therefore, the equilibrium price is $25.

Use the Following General Linear Demand Relation: Where P