unit 4 - price floor calculations

Unit 4 – Government Intervention Price Floor - Paper 3 Calculations Given the following Supply/Demand functions for rice:

Qd = 100 - 5P Qs = -50  10P 1. Calculate Calculate the Price Price and and Quantity Quantity euili!ri euili!rium. um. ". Calculate Calculate the Price Price and and Quantity inter intercept cept for the Demand Demand function. #. Calculate Calculate the Price Price inter intercept cept for the Supply Supply function. function. $. Graph the Supply Supply and Deman Demand d function. function.

!"e Government intervenes in t"e mar#etplace and places a Price Ceilin$ Ceilin$ on %ice %ice o& '15 per unit( 1. %llustrate %llustrate the the Price Price Ceiling Ceiling on your your e&isting e&isting graph. graph. ". Show and calculate calculate the the e&cess e&cess supply/dem supply/demand and in the mar'et mar'et place. #. %s the Price Price Ceiling Ceiling e(ective) e(ective) *hy/why *hy/why not)

!"e Government a$rees to purc"ase t"e e)cess suppl* in t"e mar#etplace( 1. +ow much much will will it cost the the Govern Government ment) ) ". Calculate Calculate the new new Demand Demand function function when the the government government purchases the e&cess supply.

Consumer+Producer ,urplus and !otal el&are .oss 1. Calculate Calculate the Consum Consumer er Surplus Surplus with with no Government Government %ntervention. ". Calculate the Producer Producer Surplus with no Government Government %ntervention. %ntervention. #. Calculate Calculate the Consumer Consumer Surplus Surplus with Governm Government ent %ntervent %ntervention. ion. $. Calculate the Producer Producer Surplus with with Government Government %ntervention.

Unit 4 – Government Intervention Price Floor - Paper 3 Calculations ,. Calculate the -otal *elfare *elfare oss oss with Government Government %ntervention. %ntervention.