Suppose market demand and supply are given by Q^d = 100 - 2P and Q^S = 5 + 3P.If a price floor of $30 is set, what will be size of the resulting surplus?

Question

Quizplus · Accepted Answer

To calculate the surplus, we need to find the quantity supplied and quantity demanded at the price floor of $30.

Quantity demanded at P=$30: 
QS1U1P1d = 100 - 2(30) = 40

Quantity supplied at P=$30: 
QS1U1P1S = 5 + 3(30) = 95

Since the quantity supplied is greater than the quantity demanded at the price floor, there is a surplus.

Surplus = QS - QD 
Surplus = 95 - 40 = 55

Therefore, choice D is the correct answer.

Suppose Market Demand and Supply Are Given by Qd =

Suppose Market Demand and Supply Are Given by Q^d =