Suppose the market for potatoes can be expressed as follows: Supply: QS = -20 + 10p Demand: QD = 400 - 20p If the government sets a maximum price of $10 per unit, what will be the quantity demanded and quantity supplied?
What will be an ideal response?
With a maximum price of $10, suppliers will sell only 80 units. (Q = -20 + 10(10 ) = 80 ). But at a price of $10, buyers wish to purchase 200 units: Q = 400 - 20(10 ) = 200. Thus, there will be excess demand of 120 units.
Economics
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