Question
Suppose that the supply curve for wheat is given by QS=25+3P, and the demand curve for wheat is given by QD=50-2P, where QS is the
Suppose that the supply curve for wheat is given by QS=25+3P, and the demand curve for wheat is given by QD=50-2P, where QS is the number of bushels of wheat supplied each day and QD is the number of bushels of wheat demanded each day, and P is the price of a bushel of wheat. a. Find the equilibrium price and quantity of wheat. b. Sketch a picture of the supply curve and the demand curve. Be sure to label the y-intercept for both curves, the slope of both curves, and the equilibrium price and quantity. Also make sure you label your axes. c. Concerned about rising food prices, suppose that the government introduces a price ceiling of $2 per bushel on wheat. What is the QD and QS? Amount of the apple shortage? d. Is this new quantity economically efficient? What's a dollar measure that could be used to determine if the price ceiling is helping or hurting.
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