1. Suppose that the market for wheat is characterized by the following demand and supply relationships....

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1. Suppose that the market for wheat is characterized by the following demand and supply relationships. Q=30,000-20P Q=80P Demand: Supply: where Q is the quantity of wheat in bushels and P is the price of a bushel of wheat. a. Find the market equilibrium quantity of bushels of wheat and the market equilibrium price. b. Graph the demand and supply curves. Make sure to appropriately label both axes and identify the market equilibrium price and quantity. c. Calculate the amount of consumer surplus at the market equilibrium. In the graph you constructed in part (b), shade the area that relates to consumer surplus in blue. d. Suppose that the government decides that there is a shortage of bread and wants to reduce bakers' costs. As a result, Congress passes a $100 price cap on a bushel of wheat. Does this policy increase the amount of wheat that is transacted? That is, does the market quantity increase after the imposition of the price ceiling? Hint: Find the post-ceiling quantity demanded and quantity supplied. 1. Suppose that the market for wheat is characterized by the following demand and supply relationships. Q=30,000-20P Q=80P Demand: Supply: where Q is the quantity of wheat in bushels and P is the price of a bushel of wheat. a. Find the market equilibrium quantity of bushels of wheat and the market equilibrium price. b. Graph the demand and supply curves. Make sure to appropriately label both axes and identify the market equilibrium price and quantity. c. Calculate the amount of consumer surplus at the market equilibrium. In the graph you constructed in part (b), shade the area that relates to consumer surplus in blue. d. Suppose that the government decides that there is a shortage of bread and wants to reduce bakers' costs. As a result, Congress passes a $100 price cap on a bushel of wheat. Does this policy increase the amount of wheat that is transacted? That is, does the market quantity increase after the imposition of the price ceiling? Hint: Find the post-ceiling quantity demanded and quantity supplied.

Answer rating: 100% (QA)

a At market equilibrium Demand Supply Therefore 30000 20P 80P 30000 100P P 300 For quantity since Qu... View the full answer