Using substitution or elimination method solve the equation

-80Pa + 40Pg + 400 = Da..........1

120Pa - 80 = Sa........2

40Pa - 40Pg + 600 = Dg..........3

80Pg - 40 = Sg..........4
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1 Answer

(1) Da=-80Pa+40Pg+400;

(2) Sa=120Pa-80;

(3) Dg=40Pa-40Pg+600;

(4) Sg=80Pg-40.

From these:

(5) Da+Dg=-40Pa+1000;

(6) Sa+Sg=120Pa+80Pg-120.

ADDITIONAL INFORMATION SUPERSEDES INITIAL SOLUTION

If D=demand, S=supply, P=price, then we're into equilibria, economically speaking.

All variables must be positive (including zero) since negative values have no meaning in this context.

Since Da≥0, -80Pa+40Pg+400≥0, 40Pg+400≥80Pa, Pg+10≥2Pa; also, since Dg≥0, 40Pa-40Pg+600≥0, 40Pa+600≥40Pg, Pa+15≥Pg.

From (5) the combined demand is Da+Dg and from (6) the combined supply is Sa+Sg. When demand and supply are in equilibrium:

-40Pa+1000=120Pa+80Pg-120, 160Pa+80Pg=1120, 2Pa+Pg=14, so Pg=14-2Pa.

We have two inequalities for Pa and Pg.

We know that Pg=14-2Pa (which is an equality, not an inequality, dictated by equilibrium conditions). When we combine this with the two inequalities they intersect when:

Pg=14-2Pa and Pa+15≥Pg and Pg+10≥2Pa; that is, when Pg+10=2Pa and Pg=14-2Pa are satisfied (and only positive values are deduced, so the other inequality is eliminated):

Pg=14-2Pa and Pg=2Pa-10, that is, 14-2Pa=2Pa-10, 4Pa=24, Pa=6, so Pg=14-12=12-10=2.

It would appear that equilibrium is reached when the two prices are Pa=6 and Pg=2.

Da=-80Pa+40Pg+400=-480+80+400=0; Dg=40Pa-40Pg+600=240-80+600=760. Combined demand=760.

Sa=120Pa-80=720-80=640; Sg=80Pg-40=160-40=120. Combined supply=640+120=760.

This may not be the correct answer. I have just applied mathematical logic, with a very limited amount of business/economics knowledge. However, I hope the answer is useful to you.

by Top Rated User (1.2m points)

Thanks for that, Debret. Now I know that we're dealing with economics or business mathematics, since prices have been mentioned. The equations (or some of them) might be functions rather than variables. It may be helpful to know what a and g represent.

So now I guess that S=supply, D=demand, P=price. Now it's beginning to make sense.

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