Given the following supply and demand curves for coupon books, a price of $10.00 would produce:
Demand Q = 55,000 - 4000P
Supply Q = 5000 + 1000P
A) equilibrium.
B) a shortage of 10,000 coupon books.
C) a surplus of 10,000 coupon books.
D) a shortage of 17,200 coupon books.
E) a surplus of 17,200 coupon books.

Question

Quizplus · Accepted Answer

To find the equilibrium price and quantity, we set the demand and supply equations equal to each other and solve for P:
55,000 - 4000P = 5000 + 1000P
54,000 = 5000 + 5000P
P = $8.80 per coupon book.
To find the equilibrium quantity, we substitute the equilibrium price into either the supply or demand equation:
Q = 55,000 - 4000(8.80) = 21,200 coupon books.
Therefore, a price of $10.00 would be above the equilibrium price and would lead to a surplus of coupon books.

Given the Following Supply and Demand Curves for Coupon Books