Suppose the credit market in Triumph, Illinois is described by the schedule shown below. Local financial regulators have set the maximum interest rate for commercial credit at 9%. Interest Rate Quantity of credit supplied Quantity of credit demanded 5% $800,000 $3,500,000 7% $1,100,000 $3,100,000 9% $1,500,000 $2,600,000 11% $2,000,000 $2,000,000 13% $2,600,000 $1,300,000 15% $3,300,000 $500,000 Illustrate this market in a supply and demand graph. What is the market equilibrium interest rate? How many fewer borrowers are there at the mandated interest rate than there would be at equilibrium.

Suppose the credit market in Triumph, Illinois is described by the schedule shown below. Local financial regulators have set the maximum interest rate for commercial credit at 9%. Interest Rate Quantity of credit supplied Quantity of credit demanded 5% $800,000 $3,500,000 7% $1,100,000 $3,100,000 9% $1,500,000 $2,600,000 11% $2,000,000 $2,000,000 13% $2,600,000 $1,300,000 15% $3,300,000 $500,000 Illustrate this market in a supply and demand graph. What is the market equilibrium interest rate? How many fewer borrowers are there at the mandated interest rate than there would be at equilibrium.

ECON MICRO

5th Edition

ISBN:9781337000536

Author:William A. McEachern

Publisher:William A. McEachern

Chapter13: Capital, Interest, Entrepreneurship, And Corporate Finance

Section: Chapter Questions

Problem 4.8P

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Interest Rate	Quantity of credit supplied	Quantity of credit demanded
5%	$800,000	$3,500,000
7%	$1,100,000	$3,100,000
9%	$1,500,000	$2,600,000
11%	$2,000,000	$2,000,000
13%	$2,600,000	$1,300,000
15%	$3,300,000	$500,000