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Take a Deck of Playing Cards and Remove the Aces

Question 1

Multiple Choice

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

Correct Answer:

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