In: Economics
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.
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