Market demand is given as Qd = 100 - 2P. Market supply is given as Qs = P + 10. What would result if the market price were $40?

Question

Quizplus · Accepted Answer

Substitute P = $40 into both demand and supply equations to obtain:

Qd = 100 - 2($40) = 20
Qs = $40 + 10 = 50

At the price of $40, quantity demanded is 20 units and quantity supplied is 50 units, which creates a surplus (Qs > Qd) of 30 units. Therefore, the correct answer choice is (C).

Market Demand Is Given as Qd = 100 - 2P