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Price controls - numerical (1)

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Question 1

If demand can be shown by a linear demand function of the form Qd = 155 - 10P and supply can be shown by a linear supply function of Qs = -50 + 10P, calculate the quantities demanded and supplied at prices between $1 and $15.

The government puts in place a price ceiling of $8 per unit.

Question 2

What will be the excess demand in the market as a result of the price ceiling?

Question 3

Calculate consumer expenditure:

  1. Before the price ceiling was imposed.
  2. After the price ceiling was imposed.

Question 4

Calculate the firm's revenue:

  1. Before the price ceiling was imposed.
  2. After the price ceiling was imposed.

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