A first year student in economics analyzed the demand and supply for cups of tea at a staff canteen in summer and found out that QD = 550 - 30P and QS = 50 + 20P. Where QD = Quantity of cups of tea demanded QS = Quantity of cups of tea supplied P = price. The equilibrium price is

Question

and equilibrium quantity of tea cups at the canteen in summer is

Answer 1

To find the equilibrium price and quantity, we need to set the quantity demanded equal to the quantity supplied:

550 - 30P = 50 + 20P

Now, solve for P:

550 - 30P - 20P = 50
550 - 50 = 50P
500 = 50P
P = 500/50
P = 10

So the equilibrium price is $10.

Now, substitute the equilibrium price back into either the demand or supply equation to find the equilibrium quantity:

QD = 550 - 30(10)
QD = 550 - 300
QD = 250

Therefore, the equilibrium quantity of cups of tea at the canteen in summer is 250.