Question

10. Problems and Applications Q10 

A market is described by the following supply and demand curves: 

Q_S = 4P 

Q_D = 400-P 

The equilibrium price is $_______  and the equilibrium quantity is _______ . 

Suppose the government imposes a price ceiling of $90. This price ceiling is _______ , and the market price will be $_______ . The quantity supplied will be _______ and the quantity demanded will be _______ . Therefore, a price ceiling of $90 will result in _______ . 

Suppose the government imposes a price floor of $90. This price floor is _______ , and the market price will be $_______ . The quantity supplied will be _______ and the quantity demanded will be _______ . Therefore, a price floor of $90 will result in _______ .

Instead of a price control, the government levies a tax on producers of $10. As a result, the new supply curve is: 

Q_S = 4(P-10) , 

with this tax, the market price will be _______ , the quantity supplied will be _______ , and the quantity demanded will be _______ . The passage of such tax will result in _______ 

Answer 1