Market demand is given as Qd = 150 - P.Market supply is given as Qs = 4P.In a perfectly competitive equilibrium,what will be price and quantity traded in the market?

Question

Quizplus · Accepted Answer

In a perfectly competitive equilibrium, price will be such that market demand equals market supply.

Qd = Qs 
150 - P = 4P 
150 = 5P 
P = $30

Substituting P = $30 in either Qd or Qs, we get:

Qd = 150 - 30 = 120 
Qs = 4 x 30 = 120

Therefore, the equilibrium price is $30 and the equilibrium quantity traded in the market is 120. The correct answer is (C).

Market Demand Is Given as Qd = 150 - P