The demand and supply equations for the apple market are:

Demand: P = 12 - 0.01Q (1)

Supply: P = 0.02Q (2)

where P= price per bushel, and Q=quantity.



a. Calculate the equilibrium price and quantity.

b. Suppose the government guaranteed producers a price of $10 per bushel. What would be the effect on quantity supplied? Provide a numerical value.

c. By how much would the $10 price change the quantity demanded of apples? Provide

d. 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

f. calculate the consumer surplus and producer surplus before government intervention.
g. Calculate the consumer surplus, producer surplus after intervention. Calculate the deadweight loss. Who is better off?

h. Is the economy socially better or worse off?