Question

Problems and Applications Q10 A market is described by the following supply-and-demand curves: QS = 4P QD = 400−P The equilibrium price is $ and the equilibrium quantity is . Suppose the government imposes a price ceiling of $90. This price ceiling is , and the market price will be $ . The quantity supplied will be , and the quantity demanded will be . Therefore, a price ceiling of $90 will result in . Suppose the government imposes a price floor of $90. This price floor is , and the market price will be $ . The quantity supplied will be and the quantity demanded will be . Therefore, a price floor of $90 will result in . Instead of a price control, the government levies a tax on producers of $10. As a result, the new supply curve is: QS = 4(P−10) With this tax, the market price will be $ , the quantity supplied will be , and the quantity demanded will be . The passage of such tax will result in .

Answer 1

Ans.10.