The following table applies to a purely competitive industry composed of 100 identical firms. $\begin{array}{lcl}
Quantity&&Quantity\
Demanded &Price &Supplied\
\hline
400,000 & \$ 5 & 800,000 \
500,000 & 4 & 700,000 \
600,000 & 3 & 600,000 \
700,000 & 2 & 500,000 \
800,000 & 1 & 400,000
\end{array}$ Refer to the table.The equilibrium price in this purely competitive market is:
A) $5.
B) $4.
C) $3.
D) $2.

Question

Quizplus · Accepted Answer

The equilibrium price is determined by the point where quantity demanded equals quantity supplied. In this case, at a price of $3, the quantity demanded is 600,000 and the quantity supplied is also 600,000. At any other price, either there will be excess supply (quantity supplied is greater than quantity demanded) or excess demand (quantity demanded is greater than quantity supplied). Therefore, the equilibrium price in this purely competitive market is $3.

The Following Table Applies to a Purely Competitive Industry Composed