Multiple Choice
At what price will a stock reach 'equilibrium' in the market, meaning it is perceived as fairly priced today?
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3. The Market Forces of Supply and Demand
Market Equilibrium
Multiple Choice
In a market where the demand curve is Q_d = 100 - 2P and the supply curve is Q_s = 20 + 3P, what is the equilibrium quantity? (Please answer in millions per year)
A
60
B
80
C
52
D
40
Verified step by step guidance1
Identify the equilibrium condition where quantity demanded equals quantity supplied: \(Q_d = Q_s\).
Set the demand function equal to the supply function: \$100 - 2P = 20 + 3P$.
Solve the equation for the price \(P\): rearrange terms to isolate \(P\) on one side.
Once you find the equilibrium price \(P^*\), substitute it back into either the demand or supply equation to find the equilibrium quantity \(Q^*\).
Express the equilibrium quantity in millions per year as requested.
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