Microeconomics

Table of Contents

1. Topic pack - Microeconomics - introduction
2. 1.1 Competitive Markets: Demand and Supply
3. 1.1 Competitive Markets: Demand and Supply - notes
4. 1.1 Competitive markets - questions
5. 1.1 Competitive markets - simulations and activities
6. 1.2 Elasticities
7. 1.2 Elasticities - notes
8. Section 1.2 Elasticities - questions
9. Section 1.2 Elasticities - simulations and activities
10. 1.3 Government intervention
11. 1.3 Government Intervention - notes
    1. The impact of taxation
    2. Tax revenue
    3. Tax incidence
    4. Calculating effects of a specific tax
    5. Calculating impact of a tax - example
    6. The impact of subsidies
    7. Calculating effects of a subsidy
    8. Calculating effect of a subsidy - example
    9. Price controls
    10. Price ceilings
    11. Calculate effects of price ceiling
    12. Calculating effect of a price ceiling - example
    13. Price floors
    14. Calculate effects of price floor
    15. Calculating effect of a price ceiling - example
    16. Intervention in agricultural markets
    17. Common Agricultural Policy
12. 1.3 Government intervention - questions
13. 1.3 Government intervention - simulations and activities
14. 1.4 Market failure
15. 1.4 Market failure - notes
16. Section 1.4 Market failure - questions
17. Section 1.4 Market failure - simulations and activities
18. 1.5 Theory of the firm
19. 1.5 Theory of the firm - notes (HL only)
20. Section 1.5 Theory of the firm - questions
21. Section 1.5 Theory of the firm - simulations and activities
22. Print View

Calculating effect of a price ceiling - example

Assume a linear demand function of the form:

Qd = 95 - 5P

and a linear supply curve of the form:

Qs = -40 + 10P

Using these demand and supply functions, answer the following questions. Once you have had a go at the questions, follow the link below to compare your answers.

1. Calculate the quantities demanded and supplied for prices from $1 - $15.
2. Plot these figures to give the demand and supply curves for the product.
3. Using simultaneous equations, calculate the equilibrium price and output.
4. The government then imposes a price floor of $4 on the market. Show this on the diagram.
5. Calculate the excess supply as a result of this price floor.
6. Calculate the level of consumer expenditure:
   1. before the price floor was imposed
   2. after the price floor was imposed
7. Calculate how much the government would have to spend to purchase the excess supply as a result of the price floor.

• Possible answers