The market demand function for wheat is Q^d=10-2Pand the market supply function is Q^s=4P-2 , both measured in billions of bushels per year. Suppose the government wants to increase the price of wheat to $3/bushel and they impose a price floor to achieve their goal. How much wheat goes to waste under the program? A) 10 billion bushels per year B) 4 billion bushels per year C) 6 billion bushels per year D) None

Question

Quizplus · Accepted Answer

At a price of $3, the demand is 10 - 2(3) = 4 billion bushels, and the supply is 4(3) - 2 = 10 billion bushels. The difference, 6 billion bushels, represents the surplus or waste.

The Market Demand Function for Wheat Is Qd=10-2Pand the Market

The Market Demand Function for Wheat Is Q^d=10-2Pand the Market