$Q _ { s } = 40 + 6 P - 8 P _ { I } + 10 F$ where $Q _ { s }$ is the quantity supplied of the good, P is the price of the good, $P _ { I }$ is the price of an input, and F is the number of firms producing the good.
-Suppose $P _ { I }$ = $40, F = 50, and the demand function is $Q _ { d } = 700 - 6 P$ , then if government sets a price of $30 what will be the result?

Question

Quizplus · Accepted Answer

At a price of $30, the quantity supplied is:$Q _ { s } = 40 + 6 ( 30 ) - 8 ( 40 ) + 10 ( 50 ) = 280$The quantity demanded is:$Q _ { d } = 700 - 6 ( 30 ) = 400$Therefore, there will be a shortage of 120 units.

Qs=40+6P−8PI+10FQ _ { s } = 40 + 6 P - 8 P _ { I } + 10 FQs​=40+6P−8PI​+10F

$Q _ { s } = 40 + 6 P - 8 P _ { I } + 10 F$