If demand curve for trekking boots is D = 67500 - 18P and supply curve is S = 22500 + 12P, find the equilibrium Price?a)1500b)750c)2250d)500Correct answer is option 'A'. Can you explain this answer?

Question

Answer

Equilibrium price is determined at the point where the demand and supply curves intersect. To find the equilibrium price, we need to set the demand equal to the supply and solve for the price.

Given:
Demand curve: D = 67500 - 18P
Supply curve: S = 22500 + 12P

Setting demand equal to supply, we have:

67500 - 18P = 22500 + 12P

Combining like terms:

67500 - 22500 = 18P + 12P

45000 = 30P

Dividing both sides by 30:

1500 = P

So the equilibrium price is $1500.

Explanation:
To find the equilibrium price, we use the concept of supply and demand. The demand curve represents the quantity of trekking boots that consumers are willing to buy at different prices. The supply curve represents the quantity of trekking boots that suppliers are willing to sell at different prices.

At a higher price, the quantity demanded decreases and the quantity supplied increases. At a lower price, the quantity demanded increases and the quantity supplied decreases. The equilibrium price is the price at which the quantity demanded equals the quantity supplied.

In this case, we set the demand equal to the supply and solve for the price. By simplifying the equation, we find that the equilibrium price is $1500. This means that at a price of $1500, the quantity demanded by consumers equals the quantity supplied by suppliers, resulting in a balanced market.

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