Market demand is given as Qd = 40 - 2P. Market supply is given as Qs = 2P. 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:
40 - 2P = 2P
40 = 4P
P = $10
Substituting P back into either equation to find quantity:
Qs = 2P
Qs = 20
Therefore, the equilibrium price is $10 and the equilibrium quantity traded is 20.

Market Demand Is Given as Qd = 40 - 2P