Table 17-12
The table shows the town of Driveaway's demand schedule for gasoline. Assume the town's gasoline seller(s) incurs a cost of $2 for each gallon sold, with no fixed cost.
-Refer to Table 17-12. If the market for gasoline in Driveaway is perfectly competitive, then the equilibrium price of gasoline is

Question

Table 17-12
The table shows the town of Driveaway's demand schedule for gasoline. Assume the town's gasoline seller(s) incurs a cost of $2 for each gallon sold, with no fixed cost. 
-Refer to Table 17-12. If the market for gasoline in Driveaway is perfectly competitive, then the equilibrium price of gasoline is

Quizplus · Accepted Answer

In a perfectly competitive market, the equilibrium price is determined where the quantity demanded equals the quantity supplied. From the demand schedule, the quantity demanded is 300 gallons when the price is $2. The gasoline seller(s) incurs a cost of $2 for each gallon sold, which means they will only be willing to supply gasoline when the price is $2 or higher. At a price of $2, the quantity supplied is also 300 gallons (since there are no fixed costs). Therefore, the equilibrium price is $2 and the equilibrium quantity is 300 gallons, which corresponds to option C.

Table 17-12 the Table Shows the Town of Driveaway's Demand Schedule for Schedule