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A Market's Demand and Supply Curves Are Given By

question 55

Essay

A market's demand and supply curves are given by:
Qd = 400 - 3P
Qs = 100 + 2P
where Qd is quantity demanded, Qs quantity supplied, and P is the price.
a. Suppose the government enacts a price ceiling of $60. What is the quantity demanded and supplied? Is the market characterized by a shortage?
b. Suppose that supply conditions in the market change to Qs = 80 + 2P. Given the price ceiling of $60, what happens to quantity demanded and quantity supplied? Is the market characterized by a shortage? How much are consumers willing to pay per unit for the quantity transacted?


Definitions:

Olfaction

The sense of smell, a chemical sensing system processing odors.

Memories

The mental storage of information, experiences, and learning, which can be recalled to inform and guide current behavior and thinking.

Fechner's Law

A principle in psychophysics that quantifies the relationship between the intensity of a physical stimulus and the intensity of the sensation it produces, suggesting a logarithmic relationship.

Weber's Law

A principle in psychology that proposes the smallest change in a stimulus that can be detected is proportional to the intensity of the original stimulus.

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