Market demand is given as Qd = 300 - 0.5P. Market supply is given as Qs = 50 + 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. Therefore, we can set Qd equal to Qs and solve for P and Q.

300 - 0.5P = 50 + 2P

Solving for P:

2.5P = 250

P = $100

Once we have P, we can plug it back into either Qd or Qs to solve for Q:

Qd = 300 - 0.5($100) = 250

Qs = 50 + 2($100) = 250

Therefore, in a perfectly competitive equilibrium, the price will be $100 and the quantity traded will be 250.

Market Demand Is Given as Qd = 300 - 0