The market for iced tea is characterized by the following supply and demand functions: Supply: QS=40+8pQS=40+8p...

The market for iced tea is characterized by the following supply and demand functions:

Supply: QS=40+8pQS=40+8p

Demand: QD=110−6pQD=110−6p,

where QSQS stands for quantity supplied (number of bottles), QDQD stands for quantity demand (number of bottles), and pp stands for price (per bottle). Without determining the equilibrium price, you know that the equilibrium quantity in the market for iced tea is ? bottles.

Solutions

Expert Solution

we have,

Supply = 40+8p

=> Inverse supply function is: p = Q/8 - 5

Demand = 110−6p

=> Inverse demand function is: p = 110/6 - Q/6

thus, in equilibrum the price at which market clears is same

=> Q/8 - 5 = 110/6 - Q/6

=> Q/8 + Q/6 = 110/6 + 5

= 7Q/24 = 140/6

=> Q = 20*4 = 80

Thus, the answer is 80 bottles of iced tea

Rahul Sunny answered 1 year ago

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