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  3. suppose that the demand curve for wheat is d ( p )

Suppose that the demand curve for wheat is D ( p ) = 120 − 10 p , and the supply curve is S ( p )...

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Verified Solution

Question

Economics

Suppose that the demand curve for wheat is

D

(

p

) = 120

−

10

p

, and the supply curve is

S

(

p

) = 10

p

. The government imposes a price floor of $8 per unit.

1. Draw a clearly marked graph to illustrate the demand, supply,competitive equilibrium

point (without government intervention), and the pricefloor.

2. Compute the equilibrium price and quantity after the pricefloor and interpret the results.

3. Explain who benefits and who loses from this measure and byhow much. What can you

say about the welfare of the society as a whole?

Answer & Explanation Solved by verified expert
4.4 Ratings (978 Votes)
1 Demand curve Q 120 10P10P 120 QP 12 01QThis is inverse demand curveSupply curve Q 10PAt equilibriumDemand Supply120 10P 10P20P 120P 120 20 6Q 120 106 602 When    See Answer
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