Calculating equilibrium price and quantity level
Office building maintenance plans call for the stripping,
waxing, and buffing of ceramic floor tiles.
This work is contracted out to maintenance firms, and both
technology and labor requirements are very basic. Supply and demand conditions
in this perfectly competitive service market in New York are:
QS = 2P – 20 (Supply)
QD = 80 – 2P (Demand)
– Where Q is thousands of hours of floor reconditioning per
month, and P is the price per hour.
a. Algebraically determine the market equilibrium price and
quantity.
b. Use a graph to confirm your answer
For the graph, use the following prices: $10, $20, $25, $30,
$40 to generate the relevant quantities demanded and supplied.
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