Scenario: Suppose a competitive market has ten buyers and ten sellers. The product exchanged in this market is beach hats, which are indivisible. The following table shows the reservation values for both buyers and sellers.

-Refer to the scenario above.If the market is perfectly competitive,the equilibrium price of a hat is ________.
A) $2
B) $6
C) $10
D) $12

Question

Scenario: Suppose a competitive market has ten buyers and ten sellers. The product exchanged in this market is beach hats, which are indivisible. The following table shows the reservation values for both buyers and sellers.
 
-Refer to the scenario above.If the market is perfectly competitive,the equilibrium price of a hat is ________.
A) $2 
B) $6 
C) $10 
D) $12

Quizplus · Accepted Answer

In a perfectly competitive market, the equilibrium price will be where the quantity demanded equals the quantity supplied. Looking at the table, the highest reservation price a buyer has is $10 and the lowest reservation price a seller has is also $10. Therefore, the equilibrium price of a beach hat in this market is $10.

Scenario: Suppose a Competitive Market Has Ten Buyers and Ten