ECON-301/Chapter 2 Notes

Example 1
$$\begin{align} P & = 50 + \frac{1}{2} Q^s \\ P & = 125 - \frac{1}{4} Q^d \\ \because \mbox{at} * P^* \\ \therefore 50 + \frac{1}{2} Q^* & = 125 - \frac{1}{4} Q^* \\ \frac{1}{2} Q^* + \frac{1}{4} Q^* & = 125 - 50 \\ \frac{3}{4} Q^* & = 75 \\ Q^* & = 75 \times \frac{4}{3} \\ Q^* & = 100 \\ P^* & = 50 + \frac{1}{2} \times 100 \\ P^* & = 50 + 50 \\ P^* & = 100 \\ \end{align} $$