Assume the demand and supply functions for good X can be written as
Qd = 1000 - 40Px
Qs = -200 + 20Px
In this example,equilibrium price is $20 and the equilibrium quantity is 200.

Question

Quizplus · Accepted Answer

To find the equilibrium price and quantity, we set Qd equal to Qs and solve for Px:

1000 - 40Px = -200 + 20Px
60Px = 1200
Px = $20

Substituting Px = $20 back into either the demand or supply function gives us the equilibrium quantity:

Qd = 1000 - 40(20) = 200
Qs = -200 + 20(20) = 200

Therefore, A is the correct answer.

Assume the Demand and Supply Functions for Good X Can