A market maker faces the following demand and supply for widgets.Eleven buyers are willing to buy at the following prices: $15,$14,$13,$12,$11,$10,$9,$8,$7,$6,$5.Eleven sellers are also willing to sell at the same prices.If the market maker bought and sold at the equilibrium price,what is his profit

Question

​A market maker faces the following demand and supply for widgets.Eleven buyers are willing to buy at the following prices: $15,$14,$13,$12,$11,$10,$9,$8,$7,$6,$5.Eleven sellers are also willing to sell at the same prices.If the market maker bought and sold at the equilibrium price,what is his profit

Quizplus · Accepted Answer

Since demand and supply are equal in this scenario, the equilibrium price will be the average of the two middle prices, which is $8.50. As both buyers and sellers are willing to trade at this price, the market maker can buy from a seller at $8 and sell to a buyer at $9, making a profit of $1 for each widget traded. Since there are 11 buyers and 11 sellers, and each trade will earn a profit of $1, the total profit for the market maker will be $11. Therefore, the correct answer is D, $0, as none of the answer choices match the actual profit earned in this scenario.

​A Market Maker Faces the Following Demand and Supply for Widgets.Eleven

A Market Maker Faces the Following Demand and Supply for Widgets.Eleven