The following table displays the reservation values of eight buyers and eight sellers, who each want to buy or sell a calculator.

-Refer to the table above.If the market is perfectly competitive,the equilibrium price of calculators is ________.
A) $2
B) $6
C) $12
D) $20

Question

The following table displays the reservation values of eight buyers and eight sellers, who each want to buy or sell a calculator.
 
-Refer to the table above.If the market is perfectly competitive,the equilibrium price of calculators is ________.
A) $2 
B) $6 
C) $12 
D) $20

Quizplus · Accepted Answer

In a perfectly competitive market, the equilibrium price is where the supply and demand curves intersect. In this case, at a price of $12, the quantity demanded by buyers (8 calculators) equals the quantity supplied by sellers (8 calculators) - creating no surplus or shortage. At any other price, either buyers or sellers would have excess demand or supply, leading to a surplus or shortage. Therefore, C) $12 is the equilibrium price.

The Following Table Displays the Reservation Values of Eight Buyers