The demand for cheese is given as D = 100 - 2P, while supply is given as S = -20 + 2P. The government has decided that the free-market price of cheese is too high. Use a supply-and- demand diagram to show the effect of this policy on the price of cheese and the quantity of cheese sold. To do so, draw demand and supply curves, show initial free-market eq-m, price floor, new quantity demanded and quantity supplied, and a DWL on this graph.
The demand for cheese is given as D = 100 - 2P, while supply is given as S = -20 + 2P. The government has decided that the free-market price of cheese is too high. Use a supply-and- demand diagram to show the effect of this policy on the price of cheese and the quantity of cheese sold. To do so, draw demand and supply curves, show initial free-market eq-m, price floor, new quantity demanded and quantity supplied, and a DWL on this graph.
Chapter3: Supply And Demand: Theory
Section: Chapter Questions
Problem 1WNG
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Transcribed Image Text:The demand for cheese is given as D = 100 - 2P, while supply is given as S = -20 + 2P.
The government has decided that the free-market price of cheese is too high.
Use a supply-and- demand diagram to show the effect of this policy on the price of cheese and the quantity of cheese sold. To do so, draw demand and
supply curves, show initial free-market eq-m, price floor, new quantity demanded and quantity supplied, and a DWL on this graph.
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