Skip to content

CSEET · Economic and Business Environment · Basics of Demand and Supply and Forms of Market Competition

The demand for a good is Qd = 100 - 2P and the supply is Qs = 20 + 2P, where P is in rupees per unit. What are the equilibrium price and quantity?

Equilibrium price is Rs 20 and quantity is 60 units. Equating demand and supply gives 100 - 2P = 20 + 2P, so P = 20. Substituting back, both demand and supply equal 60 units, confirming that the market clears at this point.

  1. APrice Rs 20, quantity 60Correct
  2. BPrice Rs 30, quantity 40
  3. CPrice Rs 10, quantity 80
  4. DPrice Rs 20, quantity 40

Explanation

Set Qd = Qs: 100 - 2P = 20 + 2P, so 80 = 4P and P = 20. Quantity = 100 - 40 = 60, and check supply: 20 + 40 = 60. The option with quantity 40 pairs the right price with a wrong quantity.

Did you get it right without looking?

One question tells you little. A timed set on Basics of Demand and Supply and Forms of Market Competition shows your real accuracy, how long you take and where you lose marks.

Practise Basics of Demand and Supply and Forms of Market CompetitionFree diagnostic mock

More Basics of Demand and Supply and Forms of Market Competition questions