Problema Solution
At $.60 per bushel, the daily supply for wheat is 450 bushels and the daily demand is 645 bushels. When the price is raised to $.90 per bushel, the daily supply increases to 750 bushels and the daily demand decreases to 495 bushels. Assume that the supply and demand equations are linear. Find the supply equation. Find the demand equation. Find the equilibrium price and quantity.
Answer provided by our tutors
let 'x' represent the price per bushel
supply equation is based on the points (0.6, 450) and (0.9, 645)
supply = 650x + 60
demand equation is based on the points (0.6, 645) and (0.9, 495)
demand = -500x+945
solving for when supply and demand are equal:
650x + 60 = -500x + 945
1150x = 885
x = 885/1150 = 0.7695
the equilibrium price is approximately 0.77 per bushel