Question

Let’s say the demand for burritos can be represented by Qd= 10-3P and the supply can be represented by Qs= 2+P. At equilibrium:

a	P = 4, Q= 2.
b	P= 2, Q= 4.
c	P = 4, Q= 4.
d	P = 2, Q = 5.

We refer to a situation where Qs>Qd as a _____. Price will ____ until mkt equilibrium is achieved.

a	Shortage, increase
b	Surplus, decrease
c	Surplus, increase
d	Shortage, decrease

Qd= 800-16P

Qs= -40+4P

Assume the government places a price ceiling at $3 below the mkt equilibrium price.

What will be the effect?

a	There will be a surplus of 60 units
b	There will be a surplus of 50 units
c	There will be a shortage of 60 units
d	There will be a shortage of 50 units

Answer 1

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