Price controls - numerical (1)
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:
- Before the price ceiling was imposed.
- After the price ceiling was imposed.
Question 4
Calculate the firm's revenue:
- Before the price ceiling was imposed.
- After the price ceiling was imposed.