Hi Cramster Family & Friends: Market research has revealed the following informa

Question

Hi Cramster Family & Friends:

Market research has revealed the following information about themarket for chocolate bars: The demand schedule can berepresented by the equation Qd =1,600 - 300P whereQd is the quantity demanded and P is the price. The supply schedule can be represented by the equationQs =1,400 + 700P where Qs is thequantity supplied. Calculate the equilibrium price andquantity in the market for chocolate bars.

I don't understand, can you help? Thank you.

Sincerely,

Nettie

Explanation / Answer

By using market equilibrium condition (i.e. Qs=Qd), 1400 + 700P = 1600 - 300P --> 1000P = 200 --> P = 2/10 = 0.2 Substitute P into original equation: Qd=1600 - 300*0.2 = 1600 - 60 = 1540 Answer: Equilibrium quantity Qs=Qd=1540, equilibrium price P=0.2

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