Market demand is given as Qd = 300 - 6P. Market supply is given as Qs = 4P. In a perfectly competitive equilibrium, what will be price and quantity traded in the market?

Question

Quizplus · Accepted Answer

In a perfectly competitive equilibrium, market demand = market supply.
So, we can equate Qd and Qs to find the equilibrium price and quantity.
300 - 6P = 4P
300 = 10P
P = 30
Now we can substitute this P value in either Qd or Qs equation to find quantity.
Qd = 300 - 6P = 300 - 6(30) = 120
Qs = 4P = 4(30) = 120
Therefore, in a perfectly competitive equilibrium, price will be $30 and quantity will be 120. So the correct answer is D.

Market Demand Is Given as Qd = 300 - 6P