Equilibrium point is the point at which the market will clear. The demand function based on the above question will be:
P=1600-2Q : The demand function has a negative slope.
The supply function will be as follows:
P=400+Q : The supply function has a positive slope.
The equilibrium point is the point where the quantity demanded and the quantity supplied are equal.
Therefore, equilibrium condition is as follows:
Equilibrium price will therefore be,
Substituting with Q* for Qd and P with P* get:
800=a-800 as the demand equation.
800=c+400 as the supply function.