Question

Suppose that a market analysis shows that the demand and supply equations for the market are as follows: Qd=120-4P; Qs=6P. Find the equilibrium price and quantity in this market. Now, using graph paper, plot the demand and supply curves carefully and verify that the curves intersect at the equilibrium price and quantity that you found. On your graph, be sure to label your axes and clearly indicate the quantity and price intercept values. (Graph paper is required for this problem; if you do not have access to graph paper, you can print graph paper from the following website:

Answer 1

The equilibrium is at Qd=Qs

equating both

120-4P=6P

10P=120

P=12

Q=6*12=72 units

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to graph it, we need to point on each line and then need to join it

for demand

Q=120-4P

P=0 then Q=120-4*0=120

Q=0 then 0=120-4P so P=30

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for supply

Q=6P

P=0 then Q=6*0=0

P=20 then Q=6*20=120