1. Calculation of equilibrium quantity and equilibrium price
At equilibrium:
Quantity demanded at price P (QD) is equal to Quantity supplied at price P (QS)
Thus at equilibrium:
QD=QS

2. Calculation of equilibrium quantity and equilibrium price
Thus if you have equations for demand and supply and you are expected to calculate the equilibrium quantity, you have to remember that at equilibrium: QD=QS

3. Calculation of equilibrium quantity and equilibrium price
Example: The demand curve for bottled water is
QD = P and the supply curve is QS = P. What is
the equilibrium price
the equilibrium quantity

4. Calculation of equilibrium quantity and equilibrium price
Let’s calculate the equilibrium price first
Calculation of equilibrium quantity and equilibrium price
Example: The demand curve for bottled water is
QD = P and the supply curve is QS = P.
What is
the equilibrium price
At equilibrium QD=QS
Thus we can say:
P = P
= 3P + 6P
72 = 9P
72/9 = P
8 = P
The equilibrium price is therefore 8.
Now we get all the parts containing the variable P on one side
This is the equation representing QD
…and this is the equation representing QS

5. Calculation of equilibrium quantity and equilibrium price
Now we can calculate the equilibrium quantity by replacing the price of 8 (calculated in the previous slide) in either of the two equations
You can see the answers are the same – that is because the market is in equilibrium where
QD = QS
Example: The demand curve for bottled water is
QD = P and the supply curve is QS = P.
What is
the equilibrium price
the equilibrium quantity
At equilibrium QD=QS
Thus we can say:
P = P
= 3P+9P
72 = 12P
72/12 = P
6 = P
The equilibrium price is therefore 6.
Now we replace it in the equation representing the supply
Let’s first replace it in the equation representing the demand
Demand equation:
QD = 100-6P
As P=8: QD = 100 – 6(8)
QD =
QD = 52
Supply equation:
QS = P
As P=8: QS = (8)
QS =
QS = 52

6. Calculation of equilibrium quantity and equilibrium price
New example: The demand curve for bread is
P = 60 – 1,4QD and the supply curve is P = ,6QS.
Calculate:
The equilibrium quantity
The equilibrium price
Sometimes the equations are given in terms of what the price is equal to, so let’s look at another example
Now we shall first have to calculate the equilibrium quantity and then use that information to calculate the equilibrium price

7. Calculation of equilibrium quantity and equilibrium price
Now we can calculate the equilibrium quantity by making these two equations equal:
New example: The demand curve for bread is
P = 60 – 1,4QD and the supply curve is P = ,6QS.
Calculate:
The equilibrium quantity
Thus P = ,4Qe
And P = ,6Qe
60 - 1,4Qe = ,6Qe
= 1,6Qe + 1,4Qe
120 = 3Qe
120/3 = Qe
40 = Qe
At equilibrium QD is equal to QS, thus we replace QD and QS in both equations with Qe
Take all the parts containing a variable to the same side

8. Calculation of equilibrium quantity and equilibrium price
Now we can calculate the equilibrium price by replacing the equilibrium quantity of 40 in either of the two equations
New example: The demand curve for bread is
P = 60 – 1,4QD and the supply curve is P = ,6QS.
Calculate:
The equilibrium quantity
The equilibrium price
You can see the prices are equal – there is only one equilibrium price!
…and now the one with QS
P = 60 – 1,4QD
P = 60 – 1,4(40)
P = 60 – 56
P = 4
P = ,6QS
P = ,6(40)
P =
P = 4
Let’s first use the one with QD