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Question
The wheat market is perfectly competitive, and the market supply and demand curves are given by the following equations:QD = 20,000,000 - 4,000,000P
QS = 7,000,000 + 2,500,000P,
where QD and QS are quantity demanded and quantity supplied measured in bushels, and P = price per bushel.
a. Determine consumer surplus at the equilibrium price and quantity.
b. Assume that the government has imposed a price floor at $2.25 per bushel and agrees to buy any resulting excess supply. How many bushels of wheat will the government be forced to buy? Determine consumer surplus with the price floor.
Answer
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Related questions
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Use the following statements to answer this question:
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Q:
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