Finding the Solution

We have the following 4 equations to solve for
the 4 unknowns m, b, q', and p':

(1)
(2)
(3)
(4)
Substituting equation (2) into equation (4) yields
and solving for q' yields

Then by equation (2)


Substituting equation (1) into equation (3) yields



and solving for m, using q' = 660, gives

Substituting the m, q', and p' we have found into equation (1) gives

So the final answers are that the equilibrium point is at

and that the equation for the linear demand curve is

Solution Set-Up Exercise One