If the demand schedule may be written P = 100

Question

If the demand schedule may be written P = 100 - 4Q, and the supply schedule P = 40 + 2Q, then the market clearing price and quantity are:
A)P = 60, Q = 10.
B)P = 10, Q = 6.
C)P = 40, Q = 6.
D)P = 20, Q = 20.
E)none of the above.

Quizplus · Accepted Answer

To find the market clearing price and quantity, set the demand and supply equations equal to each other: 100 - 4Q = 40 + 2Q. Solving this equation gives Q = 10. Substituting Q = 10 into either the demand or supply equation gives P = 60.