The demand and supply for a particular commodity are given by the following two equations: Demand: P
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Question:
The demand and supply for a particular commodity are given by the following two equations:
Demand: P = 10 – 0.2Qd
and
Supply: P = 2 + 0.2Qs
Where Qd and Qs are quantity demanded and quantity supplied, respectively, and P is price.
Using the equilibrium condition Qs = Qd, determine equilibrium price and equilibrium quantity.
Equilibrium price = $
Equilibrium quantity = units
Graph the two equations to substantiate your answer.
Instructions:
1. Use the line tools Qd and Qs to draw the demand and supply curves for P = 4 and 8.
2. Use the drop line tool E to identify the equilibrium quantity and price.
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