Economics question - Don't understand the question?

It can't be $30 - no buyer is willing to pay that much. A buyer whose price is $24 is willing to pay $24 and any lower price, but not a higher price. The demand curve looks like:

<price, quantity>

<$10, 5>

<$12, 4>

<$20, 3>

<$24, 2>

<$29, 1>

For suppliers, a supplier that is willing to supply at $29 will also supply at higher prices, but not at lower ones. So the supply curve looks like:

<$12, 1>

<$16, 2>

etc.

But note, that in order for the market to reach equilibrium, everyone has to know both curves. This never happens in real markets. All these Walrasian models are based on central planning, not real competition.

http://en.wikipedia.org/wiki/General_equilibrium_t...

The classic partial equilibrium models (for one market)

http://en.wikipedia.org/wiki/Partial_equilibrium

are based on every seller having many goods to sell so that there is time for prices to adjust.

So in that sense, this question is fundamentally flawed. On the other hand, replace that 1 unit with 5 billion barrels of oil per day, and you have a reasonable model: Saudi Arabia is profitable at a price of $20/barrel, while tar sands oil isn't profitable until $80/barrel yet Saudi Arabia is not willing to pump enough to supply all the demand and like the extra income the higher prices bring.

The buyer and seller will agree to buy and sell a widget at the price of $20. The equilibrium price is $20,the equilibrium quantity where demand=supply is 1.

Widget Market