Suppose the demand and supply for milk is described by thefollowing equations: QD = 600-100P; QS= -150 + 150P, where P is price in dollars, QD is quantity demanded in millions of gallons per year, and QS is quantity supplied in millions of gallons per year. Calculate equilibrium quantities and price.

Suppose the demand and supply for milk is described by thefollowing equations: QD = 600-100P; QS= -150 + 150P, where P is price in dollars, QD is quantity demanded in millions of gallons per year, and QS is quantity supplied in millions of gallons per year. Calculate equilibrium quantities and price.
Answer:

Given that the demand and supply for milk is:

QD = 600-100P;

QS= -150 + 150P,

where P is price in dollars, QD and QS are quantity supplied in millions of gallons per year.

Equate demand and supply

600 – 100P = -150 + 150P

750 = 250P

P = $3,

Q = 600 – 100*3 = 300

Hence price is $3 and quantity is 300 millions of gallons per year

Asked on February 15, 2018 in economics.
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