Question #47857

Two kinds of supply-demand situation are as follows:
D = 12 – 3P; S = -10 + 2P
D = 16 – 2P; S = 20 – 2P
where D, S and P stand for demand curve, supply curve and market price, respectively.
Which situation has a market equilibrium solution?

Expert's answer

The market equilibrium exists when

D = S

For the first situation

12 – 3P = -10 + 2P

the solution is:

5P = 22

P = 4,4

D = S = -1.2

For the second one

16 – 2P = 20 – 2P

0P = 4

there is no solution

D = S

For the first situation

12 – 3P = -10 + 2P

the solution is:

5P = 22

P = 4,4

D = S = -1.2

For the second one

16 – 2P = 20 – 2P

0P = 4

there is no solution

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