Economics

Assume that the U.S. oil demand is represented by the following demand function:

P_d= 40 - 0.15 q_d

and the supply curve (which represents the domestic oil producers) is:

P_s= 5 + 0.10 q_s

where P_dand q_dare price and quantity demanded, respectively. In addition, P_sis the price charged by domestic suppliers and q_sis the quantity supplied.

Find the equilibrium price in the market for oil in the autarky without any considerations for national security or environmental externalities.