- #1

jolly rodger

- 1

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## Homework Statement

A free market can be described by the equations Qd = 180 – 3P and Qs = –50 + 2P. What are the equilibrium conditions in this market (that is, find equilibrium P and Q) and what are the maximum gains from trade in this market?

## Homework Equations

## The Attempt at a Solution

To find equilibrium, set Qd=Qs:

180 – 3P = –50 + 2P

Solve for P

P=46

Plug P into one of the equations to find Q

Qd = 180 – 3P

Qd = 180 – 3(46)

Solve for Q

Q=42

That is what is already known but can someone "EXPLAIN" to me how to figure out the gains from trade. Not just give me the answer. Is there an equation you use?