In a perfectly competitive market, each of the 10 consumers in in the market has demand...

In a perfectly competitive market, each of the 10 consumers in in the market has demand characterized by P(q)=MWTP(q)=100 - 5.7*q. If 100 units are transacted, what is the market price?

Expert Solution

Market demand is the sum of individual demand curve.

Thus, Market demand = Q = 10q where q = individual demand

Here we have P = 100 - 5.7q => q = (1/5.7)(100 - P)

Thus, Q = 10q => Q = 10(1/5.7)(100 - P)

If 100 units are transacted then we have Q = 100

So, we have Q = 10(1/5.7)(100 - P) = 100 => P = 100 - 57 = 43 --------Market Price

Hence, Market Price = 43

Rahul Sunny answered 2 years ago

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