Eleven of your friends are about to take a course, and each one is interested in

Question

Eleven of your friends are about to take a course, and each one is interested in buying one used textbook. Another 11 of your friends have already taken the course and are willing to consider selling their books.



Suppose that each friend tells you his or her buyer value or seller cost. They ask you to figure out how to arrange all the trades. Because you have taken an economics course, you sort the buyer values in decreasing order so you can plot a demand curve and you sort the seller costs in increasing order so you can plot a supply curve.

Explanation / Answer

Equilibrium price defined by the condition Buyer Value = Seller Value is $14.

At Price = $14, there will be 6 buyers (Charles, Anand, Sam, Mica, Todd & Mark) who were willing to pay an amount more than or equal to $14 (So they'll get a bargain).

At price = $14, there will be 6 sellers (Stuart, Loela, Cheryl, Lucy, Christine, Mary) since there seller costs are lower than the equilibrium price (So they'll make a profit).

So, number of books changing hands at equilibrium price = 6

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