Question

In a competitive market with demand given by Q=100-2P, and supplies from supplier A and B given by Q^A=2P and Q^B=4P, analyze the market equilibrium, the quantities supplied by each supplier, and the price.

Answer 1

In a competitive market with demand given by Q=100-2P, and supplies from supplier A and B given by Q^A=2P and Q^B=4P, the market equilibrium price is $8.33.

Step-by-step explanation:

To analyze the market equilibrium, we need to set the demand equation equal to the supply equation:

`100 - 2P = 2P + 4P\\ 100 - 6P = 6P\\ 100 = 12P\\ P = 8.33`

Therefore, the price in the market equilibrium is $8.33. This signifies the point at which market demand matches supply, fostering stability in the pricing mechanism. The calculated equilibrium price of $8.33 plays a crucial role in understanding the balance between consumer demand and product availability within the market framework.