The Supply and demand for broccoli are described by the following equations Supp

Question

The Supply and demand for broccoli are described by the following equations Supply: Qs=4p-80 Demand: Qd=100-2p

where Q is in bushels and P is in dollars per bushel

1. Use the equations to calculate the equilibrium price and the equilibrium quantity and then graph the demand line and the supply line.

2. Calculate the consumer surplus , the Producer surplus and the total surplus at the equilibrium.

3. If the dictator who hated broccoli were to ban the vegetable, who would bear the greater burden - the buyer or the seller?

Explanation / Answer

A)
4p - 80 = 100 - 2p
6p = 180
price* = 30
quantity* = 40

B)
graph the above price and quantity. Consumer surplus will be found by calculating the area between price level and the demand cuve. Producer surplus is the area between the price level and the supply curve. Add these two surpluses together to get the total.

C)
Whoever has the larger surplus will bear the larger burden.

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