Answer: Equilibrium price is $20 and equilibrium quantity is 4 units.
Explanation: Equilibrium is a situation of rest, a situation where demand for a good is equal to its supply. The price that balance demand and supply is known as the equilibrium price.
[tex]Q_{xd} = 14 - \frac{1}{2} P_{x}
Q_{xs} = \[tex]Q_{xd} = Q_{xs}
14 - \frac{1}{2} P_{x} = \frac{1}{4} P_{x} - 1
14 + 1 = \frac{1}{4} P_{x} + \frac{1}{2} P_{x}
15 = \frac{3}{4} P_{x}
20 = P_{x}[/tex][/tex] = Equilibrium price
Equilibrium quantity is given by,
[tex]Q_{xd} = 14 - \frac{1}{2} P_{x}
= 14 - \frac{1}{2} * 20
= 14 - 10
= 4[/tex]
