Discussion
If the demand equation is given by D= 1000-P and the supply equation is given by S= 100+4P, equilibrium price would be:
Answer: B
Equilibrium price is found by setting demand equal to supply. A quick check is that at P = 180 both sides give 820 units, so there is neither shortage nor surplus.
\[ 1000 - P = 100 + 4P \]
\[ 900 = 5P \Rightarrow P = 180 \]
At this price the quantity demanded is \(1000 - 180 = 820\) and the quantity supplied is \(100 + 4 \times 180 = 820\), so the market clears. The other prices, 160, 170 and 200, do not make demand equal to supply (at 200 demand is 800 and supply 900, an excess supply). The answer is 180, option B.
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