SCENARIO: FREEDONIAN EXPORTS
In the small country of Freedonia, the domestic demand for
Widgets is represented by P = 100 - 3Q; the home supply
Of widgets is represented by P = 1Q.
Reference: Ref 104
(Scenario: Freedonian Exports) In the absence of trade,
What is the equilibrium price and quantity in Freedonia's
Widget market?

Question

SCENARIO: FREEDONIAN EXPORTS
In the small country of Freedonia, the domestic demand for
Widgets is represented by P = 100 - 3Q; the home supply
Of widgets is represented by P = 1Q.
Reference: Ref 10­4
(Scenario: Freedonian Exports) In the absence of trade,
What is the equilibrium price and quantity in Freedonia's
Widget market?

Quizplus · Accepted Answer

To find the equilibrium price and quantity, we need to equate the demand and supply functions: 
100 - 3Q = Q 
Solving for Q, we get: 
4Q = 100 
Q = 25

Substituting Q = 25 in either the demand or supply function, we get: 
P = 1Q = $25

Therefore, the equilibrium price and quantity in the absence of trade in Freedonia's Widget market are $25 and 25 units respectively, which is represented by choice C.

SCENARIO: FREEDONIAN EXPORTS in the Small Country of Freedonia, the Domestic Demand for Domestic