Suppose there are 100 consumers in the computer speaker market, each with an identical demand curve given by Q_i = 10 - 0.1P, where P is the price per pair of speakers and Q_i measures the quantity demanded of computer speakers by each person. The market supply for computer speakers is given by Q^S = 20P - 200. The equilibrium price in the computer speaker market is $____.

Question

Quizplus · Accepted Answer

To find the equilibrium price, set the market demand equal to market supply. The demand for each of the 100 consumers is 10 - 0.1P, so the total market demand is 100*(10 - 0.1P) = 1000 - 10P. The market supply is given as 20P - 200. Setting them equal: 1000 - 10P = 20P - 200. Solving for P gives P = 40.

Suppose There Are 100 Consumers in the Computer Speaker Market