Question

Suppose that the market demand and supply for milk is given by

Qd =120−6P

and

Qs = 12P − 60
a. Find the market equilibrium quantity, and the equilibrium price. (5 points)

b. Determine the quantity demanded, the quantity supplied, and the magnitude of the surplus (or shortage) if a price floor of $11 is imposed in this market. (5 points)

c. Determine the quantity demanded, the quantity supplied, and the magnitude of the surplus (or shortage) if a price ceiling of $12 is imposed in this market. (5 points)

Answer 1