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Suppose that the demand Q^Dand supply Q^Sfor maize meal in Kimberley is given by p=120-0.7Q^Dand p=3+0.2Q^S where the quantity is in thousands of kilograms and the price (p) is in rands per kilogram. Answer the following: Find the market equilibrium quantity, and the equilibrium price of maize meal. (2 marks)

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Answer:

  20 rands/kg

  130,000 kg

Step-by-step explanation:

The equilibrium quantity and price are the solution to the system of equations ...

  p = 120 -0.7q

  p = 3 + 0.2q

Setting these equal, we get ...

  0.2q +3 = p = -0.7q +120

  0.9q = 117 . . . . . . . add 0.7q-3 to both sides

  q = 117/0.9 = 130

  p = 3 +0.2·130 = 29

The equilibrium price of maize meal is 29 rands per kg; the market equilibrium quantity is 130,000 kg.