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Demand Curve and Equilibrium Price

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If the demand curve for wheat in the Untied States is P=12.4-Qd where P is the farm price of wheat (in dollars per bushel) and Qd is the quantity of wheat demanded ( in billions of bushels), and the supply curve for wheat in the United States is P= -2.6 + 2Qs where Qs is the quantity of wheat supplied ( in billions of bushels), what is the equilibrium price of wheat? What is the equilibrium quantity of wheat sold? Must the actual price equal the equilibrium price? Why or why not?

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Solution Summary

This step-by-step solution walks the student through calculations for equilibrium price and quantity in the market.

Solution Preview

You want to find the points P* and Q* at which both functions intersect.

You have two equations

P=12.4-Qd (1)
P= -2.6 + 2Qs (2)

at equilibrium Qd = Qs

If P= -2.6 + 2Qs, you are going to substitute this into ...

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