You Are Given the Following Market Data for Apples

question 188

Essay

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.

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Definitions:

Machine Minutes

A measurement of time expressing the operation of a machine in minutes.

Unlimited Demand

A theoretical concept where there is no upper limit to the quantity of a good or service that consumers wish to purchase, at a zero price point.

Materials Costs

The cost of raw materials used in the production of goods, a major component of the total manufacturing cost.

Processing Costs

Costs incurred in the course of converting raw materials into finished goods, including labor and overhead expenses.