Demand for a good is given by: Q_D = 100

Question

Demand for a good is given by: Q_D = 100 - P and supply by Q_S = .5P - 20, where P is the market price of the good. In equilibrium, price and output under perfect competition will be:

Quizplus · Accepted Answer

In equilibrium, quantity demanded equals quantity supplied. Setting the demand equation equal to the supply equation: $100 - P = 0.5P - 20$. Solving for P gives $P = 80$. Substituting $P = 80$ into either the demand or supply equation gives a quantity of 20 units.

Demand for a Good Is Given By: QD = 100