In a small country, the demand and supply of kidneys are represented by Q^D = 10,000 - 0.25P and Q^S = 0.5P + 4,000. Which of the following statements is (are) TRUE?
I. The equilibrium price is $8,000.
II. At a price ceiling of $0, there are 4,000 volunteer donors.
III. At a price ceiling of $0, there is an excess demand of 14,000 kidneys.

Question

Quizplus · Accepted Answer

The equilibrium price is found by setting Q^D = Q^S:10,000 - 0.25P = 0.5P + 4,0000.75P = 6,000P = $8,000At a price ceiling of $0, Q^D = 10,000 and Q^S = 4,000, so there is an excess demand of 14,000 kidneys.

In a Small Country, the Demand and Supply of Kidneys