Assume that the demand for boats as shown in the figure below is P = $500 - 10Q, while the supply is P = $100 + 10Q.Market equilibrium would then be:
A)P = 20, Q = 300
B)P = 300, Q = 20
C)P = 20, Q = 20
D)P = 500, Q = 500
E)None of the above.

Question

Assume that the demand for boats as shown in the figure below is P = $500 - 10Q, while the supply is P = $100 + 10Q.Market equilibrium would then be: 
A)P = 20, Q = 300 
B)P = 300, Q = 20 
C)P = 20, Q = 20 
D)P = 500, Q = 500 
E)None of the above.

Quizplus · Accepted Answer

To find the market equilibrium, we need to set the demand equal to the supply:
$500 - 10Q = $100 + 10Q 
Solving for Q, we get: 
20Q = 400 
Q = 20 
Substituting Q=20 in either the demand or supply equation, we get: 
P = $300 
Therefore, the market equilibrium is P = $300, Q = 20. So, the answer is B.

Assume That the Demand for Boats as Shown in the Figure