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10 Supply and Demand Practice Questions

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7 of 10

10 Supply and Demand Practice Questions - Question 7
Question 7: Given the following data:

WIDGETS P = 80 - Q (Demand)
P = 20 + 2Q (Supply)

Given the above demand and supply equations for widgets, find the equilibrium price and quantity.

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Answer: To find the equilibrium quantity, simply set both of these equations equal to each other.

80 - Q = 20 + 2Q

60 = 3Q

Q = 20

Thus our equilibrium quantity is 20. To find the equilibrium price, simply substitute Q = 20 into one of the equations. We will substitute it into the demand equation:

P = 80 - Q

P = 80 - 20

P = 60

Thus our equilibrium quantity is 20 and our equilibrium price is 60.

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