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Zorluk: OrtaPrice Controls: Ceilings and Floors

The market demand and supply functions for maize in a agricultural region are given by Qd=400−10PQ_d = 400 - 10P and Qs=100+5PQ_s = 100 + 5P, where PP is the price per bag in Naira, and QQ is the quantity in thousands of bags. If the government enforces a guaranteed minimum price (price floor) of ₦30 per bag, what will be the resulting market outcome?

  1. An excess supply (surplus) of 150,000 bagsCevap
  2. B
    An excess demand (shortage) of 150,000 bags
  3. C
    An excess supply (surplus) of 50,000 bags
  4. D
    An excess demand (shortage) of 50,000 bags

Cevap

An excess supply (surplus) of 150,000 bags
Substituting the regulated price floor of ₦30 into the demand equation yields a quantity demanded of 100,000 bags (Qd=400−10(30)=100Q_d = 400 - 10(30) = 100). Substituting P=30P = 30 into the supply equation yields a quantity supplied of 250,000 bags (Qs=100+5(30)=250Q_s = 100 + 5(30) = 250). Because the quantity supplied exceeds the quantity demanded by 150,000 bags (250−100=150250 - 100 = 150), the price floor results in an excess supply (surplus) of 150,000 bags.

Adım Adım Çözüm

1
Calculate quantity demanded (QdQ_d) at the regulated price floor (P=30P = 30)
Qd=400−10(30)=400−300=100Q_d = 400 - 10(30) = 400 - 300 = 100 thousand bags
Evaluates the quantity consumers are willing to purchase at the minimum price.
2
Calculate quantity supplied (QsQ_s) at the regulated price floor (P=30P = 30)
Qs=100+5(30)=100+150=250Q_s = 100 + 5(30) = 100 + 150 = 250 thousand bags
Evaluates the quantity producers are willing to supply at the minimum price.
3
Determine the market imbalance by calculating Qs−QdQ_s - Q_d
250−100=150250 - 100 = 150 thousand bags (150,000150,000 bags) of excess supply
Since Qs>QdQ_s > Q_d, setting a price floor above the equilibrium price (Pe=20P_e = 20) creates a market surplus.

Anahtar Kavram

Price Floor and Market Surplus Calculation
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Konular

Price Controls: Ceilings and Floors

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