BlackboardLTE 4:49 PM 861966243235506587 Read Only - You can\'t save changes to
ID: 1150513 • Letter: B
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BlackboardLTE 4:49 PM 861966243235506587 Read Only - You can't save changes to this file Save a copy Exercise: Question 6: Suppose demand and supply are given by Qd = 60 _ P and Qs =P-20 What are the equilibrium quantity and price in this market? Determine the quantity demanded, the quantity supplied, and the magnitude of the surplus if a price floor of $50 is imposed in this market. Determine the quantity demanded, the quantity supplied, and the magnitude of the shortage if a price ceiling of $32 is imposed in this market. Also determine the full economic price paid by consumers. a. b. c. Slide 47 of 56 Notes 45 46 48 49Explanation / Answer
Equiliibrium achieved when
Qd=Qs
60-P=P-20
P=40 and Q=20
Answer for B)
IF Price set at 50
then Q=50-20=30 (Quantity Supplied)
Q=60-P =10 (Quantity Demanded)
SUrplus before this change
1/2(60-40)*20=200
Surplus after this change
1/2(60-50)*10=50
Decrease in surplus by 200-50=150
Answer for Part C)
If Price imposed is $32
Q=60-P=60-32=28
Q=P-20=12
We have an excess demand =28-12=16 (shortage)
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