Essay
You are given the following market data for apples.
Demand is represented by: P = 12 - 0.01Q
Supply is represented by: P = 0.02Q
where P= price per bushel, and Q=quantity.
a.Calculate the equilibrium price and quantity.
b.Suppose the government guaranteed producers a price of $10 per bushel.What would be the effect on quantity supplied? Provide a numerical value.
c.By how much would the $10 price change the quantity of apples demanded? Provide a numerical value.
d.Would there be a shortage or surplus of apples?
e.What is the size of this shortage or surplus? Provide a numerical value.
Correct Answer:
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a.Q = 400 bushels, P = $8.
b.Q...View Answer
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b.Q...
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