The tables below show reservation values of buyers and sellers in a market. There are three buyers and two sellers. Each buyer's reservation values for the fourth unit and above are negative, and each seller can produce at most four units.

-Refer to the tables above.What is the range of equilibrium prices? What is the equilibrium quantity?
A) $25 and $30; 4 units
B) $25 and $45; 5 units
C) $30 and $35; 5 units
D) $35 and $45; 6 units

Question

The tables below show reservation values of buyers and sellers in a market. There are three buyers and two sellers. Each buyer's reservation values for the fourth unit and above are negative, and each seller can produce at most four units.
 
-Refer to the tables above.What is the range of equilibrium prices? What is the equilibrium quantity?
A) $25 and $30; 4 units 
B) $25 and $45; 5 units 
C) $30 and $35; 5 units 
D) $35 and $45; 6 units

Quizplus · Accepted Answer

The equilibrium price range is where the quantity demanded equals the quantity supplied. From the given options, only the range of $30 to $35 meets this criterion, with an equilibrium quantity of 5 units.

The Tables Below Show Reservation Values of Buyers and Sellers