Equilibrium Calculation Review
An economic analyst is tasked with finding the equilibrium point for the local wheat market. The market's demand is described by the function , and the supply is described by , where P is the price per bushel and Q is the quantity in thousands of bushels.
The analyst submits the following calculation: Step 1: Set functions equal: $500 - 20P = 50 + 30PStep 2: Solve for Q: \450 = 50QQ = 9. Step 3: Substitute Q back into the demand function: $9 = 500 - 20P, so $20P = 491P = $24.55$. Conclusion: The equilibrium quantity is 9,000 bushels and the equilibrium price is $24.55.
Identify the fundamental error in the analyst's methodology. Then, perform the correct calculation to find the actual equilibrium price (P*) and quantity (Q*).
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Sociology
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Economics
Economy
Introduction to Microeconomics Course
CORE Econ
Ch.8 Supply and demand: Markets with many buyers and sellers - The Economy 2.0 Microeconomics @ CORE Econ
Analysis in Bloom's Taxonomy
The Economy 2.0 Microeconomics @ CORE Econ
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