Expert: Bobby Soltani - 6/21/2009

Question
Hello,
I am completely lost in the area of algrebra. I am hoping you can explain, if possible, how to solve the following equation: (this is macroeconomics) 1.Qd= 9 - 1P 2.Qs = -5 + 1P 3. Qs= Qd
A. P* then equals_________
B.Q* then equals _________
I am hoping you can explain the steps in order for me to figure out this problem, I am lost!
Thank you very much for offering your time.


Answer
Hi,
1) Qd = 9 - P
2) Qs = -5 + P
3) Qs = Qd
Substitute 9-P for Qd in equation 3, and -5+p for Qs in equation 3

-5 + P = 9 - P
add 5 to both sides

P = 14 - P

add P to both sides

2P = 14
divide both sides by 2

P = 7

Plug 7 in for P into equation 1:

Qd = 9 - 7
Qd = 2
Plug 2 in for Qd in equation 3
Qs = 2

Let me know if you have any questions.

Bobby