Market Equilibrium

• Price, P*, and Quantity, Q*, Where Demand Equals Supply

• Graphically:

• Algebraically:

Qd = 5-4P = 8P-1 = Qs

? 6=12P

? P*=6/12 = $0.50 per apple

Q*=5-4(0.5) = 5-2 =3 million apples

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