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A market is described by the following supply and demand curves: Q S = 2 P Q D = 300 – P a. Solve for the equilibrium price and quantity. b. If the government imposes a price ceiling of $90, does a shortage or surplus (or neither) develop? What are the price, quantity supplied, quantity demanded, and size of the shortage or surplus? c. If the government imposes a price floor of $90, does a shortage or surplus (or neither) develop? What are the price, quantity supplied, quantity demanded, and size of the shortage or surplus? d. Instead of a price control, the government levies a tax on producers of $30. As a result, the new supply curve is: Q 5 = 2( P – 30). Does a shortage or surplus (or neither) develop? What are the price, quantity supplied, quantity demanded, and size of the shortage or surplus?

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Principles of Macroeconomics (Mind...

8th Edition
N. Gregory Mankiw
Publisher: Cengage Learning
ISBN: 9781305971509
BuyFind

Principles of Macroeconomics (Mind...

8th Edition
N. Gregory Mankiw
Publisher: Cengage Learning
ISBN: 9781305971509

Solutions

Chapter
Section
Chapter 6, Problem 10PA
Textbook Problem

A market is described by the following supply and demand curves:

QS = 2P

QD = 300 – P

a. Solve for the equilibrium price and quantity.

b. If the government imposes a price ceiling of $90, does a shortage or surplus (or neither) develop? What are the price, quantity supplied, quantity demanded, and size of the shortage or surplus?

c. If the government imposes a price floor of $90, does a shortage or surplus (or neither) develop? What are the price, quantity supplied, quantity demanded, and size of the shortage or surplus?

d. Instead of a price control, the government levies a tax on producers of $30. As a result, the new supply curve is:

  Q5 = 2(P – 30).

  Does a shortage or surplus (or neither) develop? What are the price, quantity supplied, quantity demanded, and size of the shortage or surplus?

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