Question textConsider the following model of a Marshallian market:(Demand) q = 180 - 2.5p(Supply) q = -50 + 2.5pGiven this information we can determine that the equilibrium price will be $Answer 1 Question 1[input] and the equilibrium quantity will be Answer 2 Question 1[input]If the Government sets a price below the equilibrium price there would be a Answer 3 Question 1[select: , surplus, shortage] in the market.

Question

Question textConsider the following model of a Marshallian market:(Demand) q  = 180 - 2.5p(Supply) q = -50 + 2.5pGiven this information we can determine that the equilibrium price will be $Answer 1 Question 1[input] and the equilibrium quantity will be Answer 2 Question 1[input]If the Government sets a price below the equilibrium price there would be a Answer 3 Question 1[select: , surplus, shortage] in the market.

BlackTom AI · Accepted Answer

Set demand equal to supply: 180 − 2.5p = −50 + 2.5p. This condition defines market equilibrium where quantity demanded equals quantity supplied.

1. Relevant knowledge points and concepts
- Marshallian demand and supply: demand slope is negative (higher p → lower q); supply slope is positive (higher p → higher q).
- Market equilibrium occurs where qd = qs.
- If price is set below equilibrium, quantity demanded exceeds quantity supplied → shortage; above equilibrium causes surplus.

2. Complete reasoning process (step by step)
Start with the equilibrium condition:
180 − 2.5p = −50 + 2.5p

Move like terms to one side by adding 2.5p to both sides and adding 50 to both sides:
180 + 50 = 2.5p + 2.5p

Combine terms:
230 = 5.0p

Solve for p:
p = 230 / 5.0

Compute:
p = 46

3. Calculations for equilibrium quantity (all intermediate steps)
Use either demand or supply with p = 46.

Demand: q = 180 − 2.5(46)
2.5 × 46 = 115
q = 180 − 115 = 65

Supply: q = −50 + 2.5(46)
2.5 × 46 = 115
q = −50 + 115 = 65

Both give q = 65, confirming consistency.

4. Why the correct answer is correct
Equilibrium price $46 and equilibrium quantity 65 satisfy both the demand and supply equations simultaneously, which is the defining condition for equilibrium in a Marshallian market.

5. Why other options are incorrect (price below equilibrium)
If the government sets p < 46, then qd > qs. Example: p = 40 → qd = 180 − 2.5(40) = 180 − 100 = 80; qs = −50 + 2.5(40) = −50 + 100 = 50. Demand (80) exceeds supply (50) → shortage of 30. A surplus would occur only if price were set above equilibrium, so “surplus” is incorrect.

6. Conclusion / final confirmation
Equilibrium price = $46, equilibrium quantity = 65, and a price set below equilibrium creates a shortage. This matches the provided answers (46 and 65).

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