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The demand and supply equations for the pear market are: Demand: P = 12 - 0.01Q Supply: P = 0.02Q where P= price per bushel, and Q=quantity.
a. Calculate the equilibrium price and quantity.
b. Suppose the government guaranteed producers a price of $20 per bushel. What would be the effect on quantity supplied? Provide a numerical value.
c. By how much would the $20 price change the quantity of apples demanded? Provide a numerical value.
d. Would there be a shortage or surplus of apples?
e. What is the size of this shortage or surplus? Provide a numerical value.
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