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Market Demand and Market Equilibrium Price

Compute the market demand and determine the market equilibrium price and market equilibrium demand.

1. Use the following demand data to compute the market demand when the price is $45.

P D1 D2 D3
37 20 4 8
47 15 2 7
57 9 1 6
67 5 1 4

2. Use the following supply data along with the demand data from exercise 1 to determine the market equilibrium price and market equilibrium demand.

P S1 S2 S3
37 1 4 13
47 2 8 14
57 9 13 18
67 9 17 20

Solution Preview

1. Calculate the demand equation for each product using the linear equation:
y = mx + c
y = demand
x = price
c = fixed demand regardless of price
20 = 37m + c c = 20 - 37m 20 -37m = 15 - 47m
15 = 47m + c c = 15 - 47m

Then determine the value of the m by dividing the change in ...

Solution Summary

A tutorial is provided on how to compute market equilibrium price and demand.

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