Numerical Problems: Equilibrium condition

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 Market Equilibrium (Linear Equations)

NP1: Given:

 Demand:

 Supply:

Find: Equilibrium price and quantity

Solution:

At Equilibrium:

Now, substituting  into the demand equation to find Q*:

∴ Equilibrium Price = 6, Quantity = 70

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NP2: Given:

Given:

Find: Equilibrium price P* and quantity Q*

Solution:

At equilibrium:

Now, substituting  into the demand equation to find Q*:

∴ Equilibrium Price = 12, Quantity = 50

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National Income Equilibrium

NP3: Given:

Find: Equilibrium income

Solution:

Substituting C, I and G in Y:

∴ Equilibrium Income,  = 1000

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NP3: Given:

Find: Y and C

Solution:



Now, substituting Y in the C



∴ Equilibrium National Income,  and Consuption Expenditure,  

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Goods market and Money Market Equilibrium: IS-LM Model

NP4: Given:

IS Curve:

LM Curve:

Find: Equilibrium Y and r

Solution:

Substituting r into IS:

∴ Equilibrium interest rate, r ≈ 1.17 and National Income, Y ≈ 766

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