Long ago, a kindly prince noticed the misery of his subjects. His subjects all had the same preferences and the same low incomes. The demand function of each subject for bread was q = 26 - p, where p is the price of bread and q is the number of loaves per week. The supply of bread per capita per week was given by the function q = .3p. The king declared since his subjects did not even get a loaf of bread per day, he would help them by making it illegal to sell bread for more than 10 groschens per loaf. Unhappily, a bread shortage arose and people waited in long lines to get bread.
a. Draw a graph to show why. Put numerical labels on the important points on your graph.
b. If the citizens could earn 4 groschens per hour at work that was exactly as unpleasant as waiting in line, what would be the equilibrium waiting time for a loaf of bread?

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The Answer of Long ago, a kindly prince noticed the misery of his subjects. His subjects all had the same preferences and the same low incomes. The demand function of each subject for bread was q = 26 - p, where p is the price of bread and q is the number of loaves per week. The supply of bread per capita per week was given by the function q = .3p. The king declared since his subjects did not even get a loaf of bread per day, he would help them by making it illegal to sell bread for more than 10 groschens per loaf. Unhappily, a bread shortage arose and people waited in long lines to get bread.
a. Draw a graph to show why. Put numerical labels on the important points on your graph.
b. If the citizens could earn 4 groschens per hour at work that was exactly as unpleasant as waiting in line, what would be the equilibrium waiting time for a loaf of bread?

Long Ago, a Kindly Prince Noticed the Misery of His