Managerial Economics & Business Strategy 8th Edition by Michael Baye,Jeff Prince

Exercise 3

Suppose demand and supply are given by Q d = 60 - P and Q s = P - 20.
a. What are the equilibrium quantity and price in this market?
b. Determine the quantity demanded, the quantity supplied, and the magnitude of the surplus if a price floor of $50 is imposed in this market.
c. 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.