Question

The question is asking for definitions of these. :)

And there is no equation given, what is the formula to find the Equilibrium price/ quantity?

G. SOLVING FOR EQUILIBRIUM PRICE AND QUANTITY

1) The standard demand and supply functions

(1) Calculating equilibrium price and quantity

(2) Illustration of equilibrium price and quantity

2) The inverse demand and supply functions

(1) Calculating equilibrium price and quantity

(2) Illustration of equilibrium price and quantity

Answer 1

To find both equilibrium price and quantity, we want to find the price at which the two equations intersect each other. In other words, find out the price when the Qs and Qd are equal. This is done by simply put the two equations equal to one another, then solving the equation for P and then put the value of p in any of Qs or Qd to get the Quantity

G)

1. linear demand equation is Qd = a - bP and supply equation = Qs = -c + dP

2. equilibtium price is calculated as

Qd = Qs i.e a - bP = -c + dP

a+c = dP +bP

P(d+b) = a+c

p = (a+c)/d+b

put price answer in any demand equation and supply equation for equilibrium quantity

2) inverse demand equation = P = (a - Qd) / b

inverse supply equation = P = (c + Qs) / d

equilibtium price is calculated as

Firstly convert them on normal demand and supply equation and the

Qd = Qs i.e a - bP = -c + dP

a+c = dP +bP

P(d+b) = a+c

p = (a+c)/d+b

put price answer in any demand equation and supply equation for equilibrium quantity