The market demand for cars is P = 1000 - Q and the supply is P = 100 + 2Q. If the regulators impose a quota of 400 units the unit price is:

Question

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With a quota of 400 units, the quantity is fixed at Q = 400. Substitute Q = 400 into the demand equation P = 1000 - Q to find the price: P = 1000 - 400 = 600. Substitute Q = 400 into the supply equation P = 100 + 2Q to find the price: P = 100 + 2(400) = 900. The equilibrium price with the quota is the average of these two prices: (600 + 900) / 2 = 750. However, the correct price should be calculated directly from the supply equation at Q = 400, which is P = 100 + 2(400) = 900, but the question seems to imply a different interpretation, leading to the choice D) 700.

The Market Demand for Cars Is P = 1000 -