Demand for a good is given by: QD = 100

Question

Demand for a good is given by: QD = 100 - P and supply by QS = 0.5P - 20,where P is the market price of the good.In equilibrium,price and output under perfect competition will be:.:

Quizplus · Accepted Answer

In equilibrium, demand (QD) must be equal to supply (QS), so:

100 - P = 0.5P - 20

Solving for P:

1.5P = 120

P = 80

Substituting P back into either the demand or supply equation gives:

QD = 100 - 80 = 20

QS = 0.5(80) - 20 = 20

Therefore, the equilibrium price is $80 and the equilibrium quantity is 20 units. So, the correct answer is B.