Consider a market characterized by the following demand and supply conditions: P

Question

Consider a market characterized by the following demand and supply conditions: Px=100-5Qx and Px=20+3Qx. The equilibrium price and quantity are, respectively:
A: $50 and 10 units B: $10 and 50 units C: $25 and 5 units D: $5 and 25 units Consider a market characterized by the following demand and supply conditions: Px=100-5Qx and Px=20+3Qx. The equilibrium price and quantity are, respectively:
A: $50 and 10 units B: $10 and 50 units C: $25 and 5 units D: $5 and 25 units
A: $50 and 10 units B: $10 and 50 units C: $25 and 5 units D: $5 and 25 units

Explanation / Answer

Given, demand curve  Px=100-5Qx and Supply curvePx=20+3Qx

Market equilibrium is attained where market demand is equal to market supply. That is

100-5Qx =20+3Qx

80=8Qx

Qx=10 units

subsituting this quantity in supply equation,

Px=20+3(10)

Px=$50

The equilibrium price and quantity are, $50 and 10 units respectively. Option A.

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