Let QS(P) be the quantity supplied at price P and QD(P) be the quantity demanded at price P. The question tells us QS(1)=x and QD(1) = x+100 (as there is excess demand), for some x. We are told that as price increases by 1, QD decreases by 20 and QS increases by 5. So: P=2 means QS(2) = x+ 5 and QD(2) = x + 80 P=3 means QS(3) = x+ 10 and QD(2) = x + 60 P=4 means QS(4) = x+ 15 and QD(2) = x + 40 P=5 means QS(5) = x+ 20 and QD(2) = x + 20 and since QS = QD we have equilibrium. So the equilibrium price is 5.
