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.
a. Q = 400 bushels, P = $8.
b. Quantity supplied would increase to 500 bushels.
c. Quantity demanded would fall to 200 bushels.
d. There would be a surplus.
e. Surplus = 300 bushels.
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