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    Finding equilibrium price and quantity

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    Office building maintenance plans call for the stripping, waxing, and buffing of ceramic floor tiles. This work is often contracted out to office maintenance firms, and both technology and labor requirements are very basic. Supply and demand conditions in this perfectly competitive service market in New York are:

    Supply: QS = 2P - 20
    Demand: QD = 80 - 2P, where

    Q = thousands of hours of floor reconditioning per month
    P = the price per hour.

    A. Algebraically determine the market equilibrium price/output combination.
    B. Use a graph to confirm your answer.

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    Solution Preview

    Please refer attached file for graph.


    A. Algebraically determine the market equilibrium price/output combination.
    For equilibrium, Put QD=QS
    QD (at ...

    Solution Summary

    Solution describes the steps to find equilibrium price and quantity in a perfectly competitive environment. These values are calculated algebraically and graphically.