Question

Consider the perfectly competitive market for diesel . The aggregate demand for gasoline is the demand for gasoline

Qd=100-p while the aggregate supply is Qs =3p work out the equilibrium price and quantity

Answer 1

Equilibrium price:

Prot maximising level of output and price in perfect competition is where the demand and supply are equal.

$Qd=Qs$

$100-p=3p$

$100=4p$

$p=25$

Equilibrium Quantity :

Plugging in the value of price into the demand function we get,

$Qd=100-p$

$Qd=100-25$

$Qd=75$ units =supply