The market demand function for wheat is Q^d=10-2P and 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 support program to achieve their goal. How much wheat must the government buy? A) 10 billion bushels per year B) 4 billion bushels per year C) 6 billion bushels per year D) None

Question

Quizplus · Accepted Answer

To find out how much wheat the government must buy, we first calculate the quantity demanded and supplied at the price of $3/bushel. For demand: Qd = 10 - 2(3) = 4 billion bushels. For supply: Qs = 4(3) - 2 = 10 billion bushels. The government must buy the difference between supply and demand to maintain the price at $3, which is 10 - 4 = 6 billion bushels per year.

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

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