Use the Following General Linear Supply Function: Where

question 43

Multiple Choice

Use the following general linear supply function: where is the quantity supplied of the good,P is the price of the good, is the price of an input,and F is the number of firms producing the good.Suppose = $40,F = 50,and the demand function is ,then if government sets a price of $30 what will be the result?

• A)a shortage of 120
• B)a surplus of 120
• C)a shortage of 160
• D)a surplus of 160

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