Asked by giannah alessandra on May 28, 2024
Verified
Long ago, a kindly prince noticed the misery of his subjects.His subjects all had the same preferences and the same low incomes.The demand function of each subject for bread was q 26 p, where p is the price of bread and q is the number of loaves per week.The supply of bread per capita per week was given by the function q .3p.The king declared since his subjects did not even get a loaf of bread per day, he would help them by making it illegal to sell bread for more than 10 groschens per loaf.Unhappily, a bread shortage arose and people waited in long lines to get bread.
a.Draw a graph to show why.Put numerical labels on the important points on your graph.
b.If the citizens could earn 4 groschens per hour at work that was exactly as unpleasant as waiting in line, what would be the equilibrium waiting time for a loaf of bread?
Bread Shortage
A situation where the supply of bread is insufficient to meet the demand, often resulting in increased prices and limited availability.
Supply Function
A mathematical representation showing the relationship between the quantity of a good that producers are willing to sell and the price of that good.
Groschens
Historically, small coins used in various European countries, symbolizing a small amount of currency.
- Learn how the dynamics of supply and demand influence the determination of equilibrium price and quantity in a market.
- Investigate the influence of government measures, including the imposition of price floors, taxes, and price ceilings, on the equilibrium of the market.
- Apply supply and demand analysis to various real-world market situations, including shifts in market demand and supply curves.
Verified Answer
HJ
Learning Objectives
- Learn how the dynamics of supply and demand influence the determination of equilibrium price and quantity in a market.
- Investigate the influence of government measures, including the imposition of price floors, taxes, and price ceilings, on the equilibrium of the market.
- Apply supply and demand analysis to various real-world market situations, including shifts in market demand and supply curves.