Demand for a product is given by Q = 100

Question

Demand for a product is given by Q = 100 - P and supply is given by Q = P - 10.If the quantity demanded rises by 10 units at every possible price,then the equilibrium price will

Quizplus · Accepted Answer

When the quantity demanded rises by 10 units at every possible price, the new demand equation becomes Q = 110 - P. Setting the new demand equal to supply to find the equilibrium, 110 - P = P - 10, solving for P gives P = 60. Originally, setting the initial demand equal to supply, 100 - P = P - 10, solving for P gives P = 55. Therefore, the equilibrium price increases by $5.