Suppose that 100 firms, each with the supply function Q=0.01P are in a particular market. If the market demand is Q=10- 0.5P then the market price is:
A)0.01.
B)10.
C)0.5.
D)5.

Question

Quizplus · Accepted Answer

In order to find the market price, we need to find the equilibrium point where market supply equals market demand. 
Market demand: Q=10-0.5P
Market supply: Q=0.01P
Setting market demand equal to market supply:
10-0.5P = 0.01P
Simplifying:
10 = 0.51P
P = 10/0.51
P = 19.61
Therefore, the market price is $19.61. 
None of the answer choices are correct as they do not match the calculated price.

Suppose That 100 Firms, Each with the Supply Function Q=0