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Question

Suppose the demand and supply curves of a commodity 'X' in a perfectly competitive market are given by:
Qd = 700 - p
Qs = 500 + 3p, for p 15
= 0, for 0 < p < 15
Find the equilibrium price and equilibrium quantity.

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Solution

At equilibrium price, Qd = Qs
Hence, 700 - p = 500 + 3p
4p=200p=50
Hence, equilibrium quantity = 700 - 50 = 650 (Demand side)
or Equilibrium quantity = 500+3×50=650 (supply side)


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