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  • Macro Econ... Formula

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    Lorraine
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    The document describes the formula for determining equilibrium quantity in economics. It defines linear supply and demand curves as functions of price, with supply as quantity supplied equals slope times price plus y-intercept and demand as quantity demanded equals intercept minus slope times price. It then shows that equilibrium is reached where quantity supplied equals quantity demanded, which can be found by setting the supply and demand formulas equal and solving for price.

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    MACRO ECON...FORMULA

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    The document describes the formula for determining equilibrium quantity in economics. It defines linear supply and demand curves as functions of price, with supply as quantity supplied equals slope times price plus y-intercept and demand as quantity demanded equals intercept minus slope times price. It then shows that equilibrium is reached where quantity supplied equals quantity demanded, which can be found by setting the supply and demand formulas equal and solving for price.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    8 views2 pages

    Macro Econ... Formula

    Uploaded by

    Lorraine
    The document describes the formula for determining equilibrium quantity in economics. It defines linear supply and demand curves as functions of price, with supply as quantity supplied equals slope times price plus y-intercept and demand as quantity demanded equals intercept minus slope times price. It then shows that equilibrium is reached where quantity supplied equals quantity demanded, which can be found by setting the supply and demand formulas equal and solving for price.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 2

    Formula

    The equilibrium quantity formula is derived from solving the linear


    equations formed for the supply and demand curve.

    Consider a basic linear supply function:

    y = mx + b

     x: Independent variable
     y: Dependent variable
     m: Slope
     b: y-intercept (line crosses the y axis)

    Demand and supply equation based on the above linear equation:

    Demand equation: QD = a – bP

     QD: Units demanded


     P: Price of each unit

    Supply equation: Qs = x + yP

     Qs: Units supplied


     P: Price of each unit

    At equilibrium, supply and demand intersect, pointing to the equilibrium


    price and quantity. At equilibrium price:

    Quantity demanded = Quantity supplied

    Qs = QD

    Substituting the formula for Qs & QD

    x + yP = a – Bp

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