Market demand is given as Qd = 80 - 2P. Market supply is given as Qs = 2P. In a perfectly competitive equilibrium, what will be price and quantity traded in the market?

Question

Quizplus · Accepted Answer

In a perfectly competitive equilibrium, market demand equals market supply. Setting Qd = Qs, we get:

80 - 2P = 2P
80 = 4P
P = $20

Substituting P = $20 back into either Qd or Qs, we get:

Qd = 80 - 2(20) = 40
Qs = 2(20) = 40

Therefore, in a perfectly competitive equilibrium, the price will be $20 and the quantity traded in the market will be 40.

Market Demand Is Given as Qd = 80 - 2P