Question

From a demand function Q_d = 2000 − 30 P and a supply function Q_s = 20 P, find out

1. equilibrium price
2. equilibrium quantity

Answer 1

Given:

• Demand function Q_d = 2000 − 30 P
• Supply function Q_s = 20 P

To find the equilibrium,

Q_d = Q_s

2000 − 30 P = 20 P

2000 = 50 P

P = `2000/50`

= ₹ 40

Equilibrium Price (P) = 40

Now substitute P = 40 in either demand or supply function to find equilibrium quantity:

Using supply function:

Q_s = 20 × 40

= 800

Equilibrium Quantity (Q) = 800 units