If each case of detergent were sold at $30, determine the amount of the shortage or surplus that would result.
Consider the market for a Procter and Gamble biodegradable detergent. Suppose that market demand is QD = 120 – 3P, and market supply is QS = –50 + 2P, where P is the price per case and Q is the quantity in thousands per week.
If each case of detergent were sold at $30, the quantity demanded would be QD = 120 – 3(30) = 30 thousand cases, while the quantity supplied would be QS = –50 + 2(30) = 10. Since QD exceeds QS, there is a shortage equal to QD – QS = 30 – 10 = 20 thousand cases of detergent.
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