Use the following general linear supply function: $Q _ { 5 } = 40 + 6 P - 8 P _ { I } + 10 F$ where $Q _ { 5 }$ 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

The correct answer is A because at a price of $30, the quantity supplied is 240 (40 + 6(30) - 8(40) + 10(50) = 240) while the quantity demanded is 420 (700 - 6(30) = 420), resulting in a shortage of 120 units.

Use the Following General Linear Supply Function Q5=40+6P−8PI+10FQ _ { 5 } = 40 + 6 P - 8 P _ { I } + 10 FQ5​=40+6P−8PI​+10F

Use the Following General Linear Supply Function $Q _ { 5 } = 40 + 6 P - 8 P _ { I } + 10 F$