Long Ago, a Kindly Prince Noticed the Misery of His

Short Answer

Long ago, a kindly prince noticed the misery of his subjects.His subjects all had the same preferences and the same low incomes.The demand function of each subject for bread was q = 26 - p, where p is the price of bread and q is the number of loaves per week.The supply of bread per capita per week was given by the function q = .3p.The king declared since his subjects did not even get a loaf of bread per day, he would help them by making it illegal to sell bread for more than 10 groschens per loaf.Unhappily, a bread shortage arose and people waited in long lines to get bread.
a.Draw a graph to show why.Put numerical labels on the important points on your graph.
b.If the citizens could earn 4 groschens per hour at work that was exactly as unpleasant as waiting in line, what would be the equilibrium waiting time for a loaf of bread?