Market demand is given as Qd = 80 - P. Market supply is given as Qs = 3P. In a perfectly competitive equilibrium, what will be price and quantity traded in the market?

Question

Quizplus · Accepted Answer

At equilibrium, market demand equals market supply, so we can set Qd = Qs:

80 - P = 3P

Solving for P, we get P = $20.

Substituting this value of P back into either the demand or supply equation, we can find the equilibrium quantity:

Qd = 80 - 20 = 60 or Qs = 3(20) = 60.

Therefore, in a perfectly competitive equilibrium, the price will be $20 and the quantity traded in the market will be 60.

Market Demand Is Given as Qd = 80 - P