Use the following general linear demand relation: $Q _ { d } = 100 - 5 P + 0.004 M - 5 P _ { R }$ where P is the price of good X,M is income,and $P _ { R}$ 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

To find the equilibrium price, set the quantity demanded equal to the quantity supplied and solve for P. Substituting the given values into the demand equation gives $Q_d = 100 - 5P + 0.004(100,000) - 5(20)$. Simplifying this gives $Q_d = 100 - 5P + 400 - 100 = 400 - 5P$. The supply function is given as $Q_s = 150 + 5P$. Setting $Q_d = Q_s$ gives $400 - 5P = 150 + 5P$. Solving for P, we get $10P = 250$, so $P = 25$.

Use the Following General Linear Demand Relation Qd=100−5P+0.004M−5PRQ _ { d } = 100 - 5 P + 0.004 M - 5 P _ { R }Qd​=100−5P+0.004M−5PR​

Use the Following General Linear Demand Relation $Q _ { d } = 100 - 5 P + 0.004 M - 5 P _ { R }$