11. Demand and supply for lawn mowers in a small town can be expressed by the fo

Question

11. Demand and supply for lawn mowers in a small town can be expressed by the following linear functions: (5 points) D(p) 40-p S(p)=10+p A) What is the equilibrium price and quantity in this market? B) Imagine the town government restricts the industry to selling only 20 lawn mowers. At what price would 20 lawn mowers be demanded? C) How many lawn mowers would suppliers supply at the price found in B) D) At what price would suppliers supply only 20 units? E) Graph the demand and supply schedule and the effect of the restriction of only 20 lawn mowers sold by the local industry. Is there a deadweight loss from this policy? If that is the case, can you quantify it?

Explanation / Answer

1--------- EQUILIBRIUM IS WHEN DEMAND = SUPPLY

40-P= 10+P

SO P = 15 AND Q = 25

2--------- WHEN DEMAND IS 20

20= 40-P AND P = 20

3-------- NOW AT P = 20, Qs = 30

4---------- NOW IF Qs = 20

20=10+p so p = 10

so answer is p = 10

Related Questions

Navigate

• Browse (All)
• Browse 1
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.