Find equilibrium quantity and price.
Consider the market for a Procter and Gamble biodegradable detergent. Suppose that market demand is QD = 120 – 3P, and market supply is QS = –50 + 2P, where P is the price per case and Q is the quantity in thousands per week.
Equilibrium price for the bio-degradable detergent occurs at the point where QD = QS. Therefore, set the demand and supply equations equal to one another and solve as follows:
Equilibrium: QD = QS
Substituting: 120 – 3P = –50 + 2P
Solving: 5P = 170
PE = $34 per case
Substituting PE into either equation gives equilibrium output, QE:
QE = 120 – 3(34) = 18 thousand cases
or: QE = –50 + 2(34) = 18 thousand cases
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