Understanding how to calculate equilibrium price and quantity is essential for anyone studying economics. Our comprehensive PDF guide simplifies this process for you.
To determine equilibrium:
- Identify Demand and Supply Equations: Start with the given demand and supply equations. For example, Demand: Qd = 50 – 2P and Supply: Qs = 10 + 3P.
- Set Qd equal to Qs: Equilibrium occurs where quantity demanded equals quantity supplied. Set 50 – 2P = 10 + 3P.
- Solve for Price (P): Combine like terms to find P. In this case, 40 = 5P, so P = 8.
- Calculate Quantity (Q): Substitute P back into either equation. Using Qd, Q = 50 – 2(8) = 34.
Download our detailed PDF guide for step-by-step instructions along with examples and practice questions. Empower yourself with knowledge on calculating equilibrium price and quantity efficiently!