The market for coffee beans is described by the following equations:

Q ^s = 2P – 8 

Q ^d  = 16 – P 

1. Suppose the government sets a price ceiling at $10. Is there a shortage? Is there a surplus?
2. The government lowers the price ceiling to $5. Describe the changes in shortage/surplus.
3. Now suppose a price floor/ceiling has been instituted, which causes a surplus of 9 units. Is this a floor or a ceiling? What specific price would create this surplus?

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AT P10 SUPPLY2x10812 DEMAND1688 SUPPLY MORE THAN DEMAND MEANS THERE WILL BE SURP... View the full answer