The demand function for corn is q = 200 - p and the supply function is q = 50 + .5p.The government sets the price of corn at $150 and agrees to purchase and destroy any excess supply of corn at that price.How much money does it cost the government to buy this corn?
A)$11,250
B)$18,750
C)$7,500
D)$10,750
E)$14,500

Question

Quizplus · Accepted Answer

At a price of $150, demand is q = 200 - 150 = 50 and supply is q = 50 + 0.5(150) = 125. The excess supply is 125 - 50 = 75. The government buys 75 units at $150 each, costing 75 * 150 = $11,250.

The Demand Function for Corn Is Q = 200 -