In a competitive market, the demand and supply curves are Q(p) = 18 - p and...

In a competitive market, the demand and supply curves are Q(p) = 18 - p and S(p) = 2p respectively. What is the price level in the competitive equilibrium?

Expert Solution

Given:

Demand - Q(p) = 18 - p

Supply - S(p) = 2p

To find: equilibrium price

Solution:

In a perfectly competitive market, equilibrium occurs at a point where demand equals supply. This means that price will be determined where the demand curve cuts the supply curve.

Equilibrium at:

Q(p) = S(p)

18 - p = 2p

3p = 18

p = 18/3

p = 6

Thus, the price level in the competitive equilibrium is 6.

Rahul Sunny answered 2 years ago

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