The market demand curve and the market supply curve of a good are given by:
qD = 450 – p for 0<p<450
qS = 150 + p
What will be the equilibrium quantity?
Answer & explanation
Correct answer: option 3
The correct answer is Option 3: 300
Since at equilibrium price market clears, we find the equilibrium price by equating market demand and supply and solve for p.
450-p = 150+ p
300 = 2p
150 = p
Putting p=150 in any equation, we get
q = 450 – p
q= 450 – 150
q= 300.