(Scenario: Freedonian Exports) In the small country of Freedonia, the domestic demand for widgets is represented by P = 100 - 3Q; the domestic supply of widgets is represented by P = 1Q. In the absence of trade, what is the equilibrium price and quantity in Freedonia's widget market?
A) $25 and 75 units
B) $75 and 25 units
C) $25 and 25 units
D) $75 and 75 units

Question

Quizplus · Accepted Answer

To find the equilibrium price and quantity, we need to set domestic demand equal to domestic supply. 
100 - 3Q = 1Q 
Solving for Q, we get Q = 25 units. 
To find the equilibrium price, we plug Q = 25 into either the demand or supply equation. 
P = 100 - 3(25) = $25. 
Therefore, the equilibrium price is $25 and the equilibrium quantity is 25 units.

(Scenario: Freedonian Exports) in the Small Country of Freedonia, the Domestic