Suppose the government decides to impose a price floor on dairy products to prevent dairy farms from closing down. If the market for a case of milk takes the form of:

Demand: P = 100 – 10Q

Supply: P = 10Q

a). Find the original equilibrium.

b). Find the market equilibrium with a price floor of $60 per case.

c). Illustrate this price floor on a graph.

Answer rating: 100% (QA)

Ans Demand P 100 10Q Supply P 10Q a In case of equillibrium demand supply 100 10Q 10Q 20Q ... View the full answer