Suppose the demand function is QD = 20.8 – 2.5P, and the supply function is QS...

Suppose the demand function is QD = 20.8 – 2.5P, and the supply function is QS = 3.5P − 5. What is the market clearing price?

Group of answer choices

$2.50

$3.50

$4.30

$5.50

Solutions

Expert Solution

$ 4.30

( Market clears when demand equals supply. QD = 20.8-2.5 P. QS = 3.5P - 5.

20.8-2.5P = 3.5P- 5

25.8= 6 P

P = 25.8/6= 4.3)

Rahul Sunny answered 1 year ago

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