The demand for a product is $Q_{d}=500-5P$ and the supply is $Q_{s}=2P-20$, where $Q$ is quantity and $P$ is price in Naira. The government sets a price floor of $200$ ₦. Determine whether the floor is binding and calculate the resulting surplus or shortage.

Question

Accepted Answer

The floor is binding; surplus = 380 units.

Neco Model Questions Vol1 2019 Economics Question 35

The demand for a product is \(Q_{d}=500-5P\) and the supply is \(Q_{s}=2P-20\), where \(Q\) is quantity and \(P\) is price in Naira. The government sets a price floor of \(200\) ₦. Determine whether the floor is binding and calculate the resulting surplus or shortage.

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Neco Model Questions Vol1 2019 Economics Question 35

The demand for a product is \(Q_{d}=500-5P\) and the supply is \(Q_{s}=2P-20\), where \(Q\) is quantity and \(P\) is price in Naira. The government sets a price floor of \(200\) ₦. Determine whether the floor is binding and calculate the resulting surplus or shortage.

Answer Options

About This Question

Master the Exam!

The demand for a product is \(Q_{d}=500-5P\) and the supply is \(Q_{s}=2P-20\), where \(Q\) is quantity and \(P\) is price in Naira. The government sets a price floor of \(200\) ₦. Determine whether the floor is binding and calculate the resulting surplus or shortage.