Suppose demand is given by $Q ^ { d } = 400 - 15 P + I$, where $Q ^ { d }$ is quantity demanded, $P$ is price and $I$ is income. Supply is given by $\mathrm { Q } ^ { \mathrm { s } } = 5 \mathrm { P }$, where $\mathrm { Q } ^ { \mathrm { s } }$ is quantity supplied. When $\mathrm { I } = 100$, equilibrium price is
A) 15
B) 20
C) 25
D) 30

Question

Quizplus · Accepted Answer

To find equilibrium price, we need to set quantity demanded equal to quantity supplied and solve for price.

Setting $Q ^ { d } = Q ^ { s }$ and substituting given functions, we get:

$$400 - 15 P + 100 = 5 P$$

Simplifying, we get:

$$515 = 20 P$$

$$P = 25.75$$

Rounding to the nearest integer, we get equilibrium price of 26. But since none of the answer choices include 26, we choose the closest one, which is C) 25.

Suppose Demand Is Given By Qd=400−15P+IQ ^ { d } = 400 - 15 P + IQd=400−15P+I

Suppose Demand Is Given By $Q ^ { d } = 400 - 15 P + I$