Supply, Demand, Equilibrium And Price Restrictions The Market Demand Curve For Milk Can Be Described By The Equation Price = 10 -0.001*Quantity Demanded, Or Qd = 10000 - 1000*P The Market Supply Curve For Milk Can Be Described By The Equation Price = 0.00
Supply, Demand, Equilibrium and Price Restrictions
The market demand curve for milk can be described by theequation Price = 10 -0.001*Quantity Demanded,
or Qd = 10000 - 1000*P
The market supply curve for milk can be described by theequation Price = 0.0003*Quantity Supplied or Qs = 2000*P
- Use these equations to complete the table, given the followingprices. Some quantity values have already been provided foryou.
Price (per gallon) | Quantity demanded (gallons of milk) | Quantity supplied (gallons of milk) |
$1.50 | 8,500 | 4,500 |
$2.00 | 8,000 | 6,000 |
$2.50 | | |
$3.00 | | |
$3.50 | 6,500 | 10,500 |
$4.00 | | |
$4.50 | | |
- Use the data in the table to graph the supply and demandcurves. The graph can be a sketch or output from a graphingprogram, but make sure to label your curves and axes. For Supplyand Demand Diagrams, Price goes on the vertical (y) axis, Quantitygoes on the horizontal (x) axis.
- What is the equilibrium price and quantity in this market?
- If a price ceiling is set at $2.00, how large will the excessdemand or shortage be? That is, what is the difference between thequantity demanded and the quantity supplied?
- If a price ceiling is set at $4, will the market be affected?Explain why or why not.
