Question

Given the table below answer the questions that follow

Qd	$	Qs
50	50.00	20
48	60.00	25
45	70.00	30
40	80.00	40
30	90.00	46

1. What is the equilibrium price? (Do not use the $ sign or cents) $

2. What is the equilibrium quantity?  

3. Why isn’t $50.00 the equilibrium price?  

4. Why isn’t $90.00 the equilibrium price?  

Answer 1

a) The equilibrium price in the market is $80 because at this price the quantity demanded and quantity supplied are the same.

b) The equilibrium quantity is 40.

c) $50 is not the equilibrium price because at this price the demand in the market is 50 and supply is only 20 that makes demand more there will be shortage in the market.

d) $90 is not the equilibrium price because at this price the demand in the market will be 30 and the supply will be 46 creating an excess supply in the market.