Demand and supply can be represented by functional equation of Qd = a - bP and Qs
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Question:
Demand and supply can be represented by functional equation of Qd = a - bP and Qs = a + bP respectively, where Qd is quantity demanded, Qs is quantity supplied, a is where the demand and supply curves cross Price axis, -b is slope of the demand curve, +b is slope of the supply curve and P is price.
If you are given Qd = 3800 - 400P and Qs = - 2600 + 400P
a) Find the equilibrium Price and equilibrium quantity (note: show your working
clearly)
b) Sketch the demand and supply curves in one diagram and show the equilibrium
point.
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