a) Equilibrium price and equilibrium quantity is the point, at which quantity demanded equals quantity supplied without any shortage or surplus.
b) The demand is P = 800 - 2Q, and the supply is P = 200 + 1Q.
i) The equilibrium price and quantity are:
800 - 2Q = 200 + Q,
3Q = 600,
Q = 200 units,
P = 200 + 200 = $400.
ii) The equilibrium price and quantity according to answer in (i) is a point where demand and supply curve intersect.
iii) When the market price is lower than the
equilibrium price, the quantity demanded will be higher than the quantity supplied, so there will be shortage.