For instance, let’s say that you are calculating the equilibrium quantity of calculators. The price of each calculator, or unit, is $5 (P{\displaystyle P}). At $5, the supplier can supply 2 calculators (X{\displaystyle X}). Therefore, your equation would be Qs=2+5P{\displaystyle Qs=2+5P}
Continuing our example from above, let’s say that the price of a calculator is $2 (P{\displaystyle P}), and the demand for a calculator at that price is 16 (X{\displaystyle X}). The demand equation would be Qd=16−2P{\displaystyle Qd=16-2P}.
Our new equation would look like this: 16−2P=2+5P{\displaystyle 16-2P=2+5P}.
16−2P=2+5P{\displaystyle 16-2P=2+5P} (16−2)−(2P+−2P)=(2−2)+(5P+2P){\displaystyle (16-2)-(2P+-2P)=(2-2)+(5P+2P)} (16−2)=(5P+2P){\displaystyle (16-2)=(5P+2P)} 14=7P{\displaystyle 14=7P}
14/7=7P/7{\displaystyle 14/7=7P/7} 2=P{\displaystyle 2=P} You now know that the equilibrium price, or the price where Qd=Qs{\displaystyle Qd=Qs}, is $2.
Qd=16−2(2){\displaystyle Qd=16-2(2)} Qd=16−4{\displaystyle Qd=16-4} Qd=12{\displaystyle Qd=12} You now know that the equilibrium quantity is 12, which means that at $2 per calculator, consumers will purchase 12 of them. To use the supply equation, your answer would be: Qs=2+5P{\displaystyle Qs=2+5P} Qs=2+5(2){\displaystyle Qs=2+5(2)} Qs=2+10{\displaystyle Qs=2+10} Qs=12{\displaystyle Qs=12}
