Microeconomics 18th Edition by Campbell McConnell, Stanley Brue, Sean Flynn

Exercise 31

ADVANCED ANALYSIS Assume that demand for a commodity is represented by the equation P = 10 -.2 Q d and supply by the equation P = 2 +.2 Q s , where Q d and Q s are quantity demanded and quantity supplied, respectively, and P is price. Using the equilibrium condition Q s = Q d , solve the equations to determine equilibrium price. Now determine equilibrium quantity. Graph the two equations to substantiate your answers.