Market demand is given as Qd = 100 - 2P. Market supply is given as Qs = P + 10. In a perfectly competitive equilibrium, what will be price and quantity traded in the market?

Question

Quizplus · Accepted Answer

In a perfectly competitive equilibrium, market demand is equal to market supply, so Qd = Qs. Substituting the given equations, we get 100 - 2P = P + 10. Solving for P, we get P = $30. Substituting this value of P in either Qd or Qs equations, we get the quantity traded as Q = 100 - 2(30) = 40. Therefore, the correct answer is C - price will be $30 and quantity will be 40.

Market Demand Is Given as Qd = 100 - 2P