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In economics, supply and demand tells us how much people will buy and at what price. But what about when you want to find the exact point when supply equals demand? The equilibrium quantity tells us where that exact point is. In this article, we’ll walk you through the simple linear equations you need to know in order to find equilibrium price and quantity in just a few minutes.

Things You Should Know

  • Plug your numbers into the supply and demand equations:
    • Qs = x + yP
    • Qd = x - yP
  • Use Qd = Qs to find the equilibrium price.
  • Plug the price, or P, into either the supply equation or the demand equation to solve for equilibrium quantity.

1
1 of 6:
Plug your numbers into the supply function.

  1. The supply equation is .
    is the units supplied, and is the quantity, or amount, of units. represents the price of each unit (typically in dollars). Look at your problem and plug in your numbers for the supply equation.[1]
    • For instance, let’s say that you are calculating the equilibrium quantity of calculators. The price of each calculator, or unit, is $5 (). At $5, the supplier can supply 2 calculators (). Therefore, your equation would be
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2 of 6:
Insert the demand into the demand function.

  1. The demand equation is .
    is the number of demanded units. In this equation, is the quantity and is still the price of your unit in dollars. Take a look at your problem and plug in the numbers to the demand function.[2]
    • Continuing our example from above, let’s say that the price of a calculator is $2 (), and the demand for a calculator at that price is 16 (). The demand equation would be .

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6 of 6:
Insert the P value and solve to find the equilibrium quantity.

  1. Plug the equilibrium price into the equation and solve. You can choose either the demand equation or the supply equation (since both are equal, they will both give you the same answer). In the example below, we will use the demand equation, which is .[5] Take the price, P, (which we now know is $2), and plug it into the equation.
    • You now know that the equilibrium quantity is 12, which means that at $2 per calculator, consumers will purchase 12 of them.
      • To use the supply equation, your answer would be:

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      About This Article

      Co-authored by:
      wikiHow Staff Writer
      This article was co-authored by wikiHow staff writer, Hannah Madden. Hannah Madden is a writer, editor, and artist currently living in Portland, Oregon. In 2018, she graduated from Portland State University with a B.S. in Environmental Studies. Hannah enjoys writing articles about conservation, sustainability, and eco-friendly products. When she isn’t writing, you can find Hannah working on hand embroidery projects and listening to music.
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      Co-authors: 3
      Updated: August 11, 2022
      Views: 548
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