The following table gives the cost and demand data for a particular market.

-Refer to the above information to answer this question.Suppose that the data describes a perfectly competitive industry.What will be the equilibrium price and output?
A)$11.5 and 4.
B)$10 and 5.
C)$8.5 and 6.
D)$7 and 7.
E)$5.5 and 8.

Question

The following table gives the cost and demand data for a particular market.
 
-Refer to the above information to answer this question.Suppose that the data describes a perfectly competitive industry.What will be the equilibrium price and output?
A)$11.5 and 4. 
B)$10 and 5. 
C)$8.5 and 6. 
D)$7 and 7. 
E)$5.5 and 8.

Quizplus · Accepted Answer

In a perfectly competitive market, the equilibrium is at the point where demand equals supply (or where marginal revenue equals marginal cost). From the given table, we can see that at a price of $8.5, the quantity demanded is 6, and the quantity supplied is also 6. Therefore, the equilibrium price and output are $8.5 and 6 respectively. Any price or quantity other than these will result in a surplus or shortage, leading to price adjustment towards equilibrium.

The Following Table Gives the Cost and Demand Data for a Particular