The perfectly competitive firewood market is composed of 1,000 identical consumers and 1,000 identical firms. The table given below shows cost for one representative firm and the demand schedule for one representative consumer. The equilibrium price in this market is _____.
Table 8.1

Question

The perfectly competitive firewood market is composed of 1,000 identical consumers and 1,000 identical firms. The table given below shows cost for one representative firm and the demand schedule for one representative consumer. The equilibrium price in this market is _____. ​
Table 8.1​

Quizplus · Accepted Answer

In a perfectly competitive market, the equilibrium occurs where the market demand equals market supply.

From the consumer demand schedule provided, we can see that at a price of $100, the consumer is willing to purchase 500 units of firewood. This represents the market demand for firewood.

On the other hand, the cost table for the representative firm shows that at a price of $100, the firm is willing to supply 500 units of firewood. This represents the market supply for firewood.

Therefore, $100 is the equilibrium price in this market. Choice C) is the correct answer.

The Perfectly Competitive Firewood Market Is Composed of 1,000 Identical