Question

The demand and supply functions for your college newspaper are, $q=-9000p+5200$ and $q=2000p+800$, respectively, where $p$ is the price in dollars. At what price should the newspapers be sold so that there is neither a surplus nor a shortage of papers?

Answer 1

Apply the equilibrium concept, to finding the price $\mathit{p}$:

The given demand function is $q=-9000p+5200$ and the supply function is $q=2000p+800$,

Using the equilibrium concept, substitute the demand function and the supply function is equal:

$\begin{array}{rcl}-9000p+5200& =& 2000p+800\\ & \Rightarrow & 9000p+2000p=5200-800\\ & \Rightarrow & 11000p=4400\\ & \Rightarrow & p=\frac{4400}{11000}\\ \therefore p& =& 0.4\end{array}$

Hence, the price is $\mathbf{\$}\mathbf{0}\mathbf{.}\mathbf{4}$.