If the demand curve of a market is P = 14 - Q and the supply curve is P = 2 + 2Q, what is the surplus created if a price support of 12 is imposed in the market?
What will be an ideal response?
The equilibrium price of 10 is now replaced with a price of 12. At 12 the quantity demanded will be 2 and the quantity supplied will be 5 leaving a surplus of 3.
You might also like to view...
Under which of the following conditions will there be no substitution bias in the CPI?
A) Indifference curves are convex. B) Indifference curves are L-shaped. C) Indifference curves are linear. D) Indifference curves are downward sloping.
The monopolist faces a:
A. perfectly elastic demand curve. B. downward sloping demand curve. C. perfectly inelastic demand curve. D. perfectly elastic supply curve.
Which of the following is a characteristic of the monopolistic competition market structure?
a. Many firms and a homogeneous product. b. Few firms and differentiated products. c. Few firms and similar products. d. Few firms and a homogeneous product. e. Many firms and differentiated products.
Ms. Jones is a professor at a university. She strongly supports the rational expectations theory. She is likely to believe that the only time active policy has an impact on aggregate output is when: a. an expansionary policy is implemented. b. a recessionary policy is implemented. c. policy changes are unannounced
d. the economy has a recessionary gap. e. the economy has an expansionary gap.