Take a deck of playing cards and remove the aces,jacks,queens,and kings.Imagine that any remaining card in the deck is a single individual,either a seller or a consumer,and all are gathered at a single perfectly competitive market.Red cards are sellers,and black cards are consumers.The number on a card indicates the individual's reservation price.Each seller owns a single unit of an indivisible good.Each consumer can buy at most one unit of the good from a seller.The invisible hand predicts that the market outcome will be ________.
A) equilibrium price = 6, and units sold = 5
B) equilibrium price = 6, and units sold = 10
C) equilibrium price = 3, and units sold = 5
D) equilibrium price = 5, and units sold = 6

Question

Quizplus · Accepted Answer

Removing the aces, jacks, queens, and kings from a deck of playing cards leaves numbers 2 through 10, making 36 cards in total. With red cards as sellers and black cards as consumers, each color represents 18 individuals. The reservation price for each individual is the number on their card. In a perfectly competitive market, the equilibrium is reached where the quantity supplied equals the quantity demanded. The middle point in this distribution is at 6, meaning sellers with reservation prices of 6 or less are willing to sell, and consumers with reservation prices of 6 or more are willing to buy. This results in 5 red cards (sellers) with numbers 2 through 6 and 5 black cards (consumers) with numbers 6 through 10, making 10 units potentially exchanged at an equilibrium price of 6.

Take a Deck of Playing Cards and Remove the Aces,jacks,queens,and