SOLUTION: plese helpe me thank s Sub Mart Inc. needs to decide the optimal price to charge and the optimal quantity to supply in the market. The demand function of the product is give

Algebra ->  Linear-equations -> SOLUTION: plese helpe me thank s Sub Mart Inc. needs to decide the optimal price to charge and the optimal quantity to supply in the market. The demand function of the product is give      Log On


   

Question 1161744: plese helpe me
thank s

Sub Mart Inc. needs to decide the optimal price to charge and the optimal quantity to supply in the market. The demand function of the product is given as QD=40-2P, while the supply function of the product is given as QS=2P where P is the price, QD is quantity demanded, and QS is quantity supplied. Solve the following demand function is given as: QD=40-2P. Calculate the equilibrium price and quantity.
Answer by MathLover1(20850) About Me  (Show Source):
You can put this solution on YOUR website!


First of all, you need to know what the equilibrium+price and the equilibrium+quantity are.
The equilibrium+price is the price at which the quantity demanded equals the quantity supplied.
The equilibrium+quantity is the quantity bought and sold at the equilibrium+price.

Now looking at this problem, you are given:
the demand function QD=40+-+2P+
and
the supply function QS=2P

In order to find the equilibrium+price (P%5Be%5D ), we need:
quantity_+demanded+=+quantity+_supplied, namely
QD=QS+

so we have the following :
+40+-+2P+=+2P, and solve for P,
40+=+2P%2B2P+
40+=+4P+
P=10->the equilibrium+price (P%5Be%5D )

so, we get P%5Be%5D+=+10 (units), then we plug P%5Be%5D into either QD+or QS to find the equilibrium+quantity (Q%5Be%5D) :

Q%5Be%5D=40+-+2%2A10=20 (units)