Suppose the demand equation is given by P=12-2Q and the supply equation is given by P=2+3Q. If the quota quantity is set at Q=1, what is the price that this unit will sell for?

Answer 1

To find the price that this unit will sell for, we need to find the equilibrium price where the demand and supply curves intersect.

Setting the demand equation and the supply equation equal to each other, we have:

12-2Q = 2+3Q

Moving all the Q terms to one side and all the constant terms to the other side, we get:

12-2 = 3Q + 2Q

Simplifying the equation further, we have:

10 = 5Q

Dividing both sides of the equation by 5, we get:

Q = 2

Now, substitute this value of Q back into either the demand or supply equation to find the price. Using the supply equation:

P = 2 + 3Q

P = 2 + 3(2)

P = 2 + 6

P = 8

Therefore, the price at which this unit will sell for is 8.