Suppose the Market for Corn Is Given by the Following

question 158

Essay

Suppose the market for corn is given by the following equations for supply and demand:
Q_S = 2p − 2
Q_D = 13 − p
where Q is the quantity in millions of bushels per year and p is the price.
a.Calculate the equilibrium price and quantity.Sketch the supply and demand curves on a graph indicating the equilibrium.
b.If a price floor is imposed at $7 per bushel,will there be a surplus or a shortage? What is the quantity of excess supply or demand that results? Draw a graph to show this.

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Definitions:

MRP

Marginal Revenue Product; the additional revenue generated by employing one more unit of a factor, such as labor or capital.

Marginal Revenue Product

The additional revenue a firm earns by employing one more unit of input, like labor or capital, in the production process.

Wage Rate

The amount of compensation a worker receives for performing a service, typically measured per hour or unit of work.

Employment

The state of having a paid job or being engaged in a productive activity.