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    equilibrium

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    Suppose that the demand for video rentals per week is given by Qd^videos = 18 - 4P^videos, and the supply of videos by your local video store per week is Qs^videos = 6 + 2P^videos.

    a) Calculate the equilibrium price and quantity in this market.

    b) If the price = $3, then what is happening in this market? Briefly explain.

    c) If the price = $0.50, then what is happening in this market? Briefly explain.

    d) If the demand function changes to Qdvideos = 26 - 6Pvideos, given the original supply function, what is the new equilibrium price and quantity?

    Please show work

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    https://brainmass.com/economics/demand-supply/demand-video-rental-calculate-equilibrium-297256

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    Solution Preview

    The demand function is given as

    QD = 18 - 4P

    The supply function is

    QS = 6 + 2P

    a. To find the equilibrium all we need to do is solve the given set of equations, that is put QD = QS and solve for P. This gives

    QD = QS
    or 18 - 4P = 6 + 2P
    or 12 = 6P
    or 2 = P

    Now plug this into either of the two equations ...

    Solution Summary

    The new equilibrium price is attained.

    $2.19