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Question - Suppose that the demand and supply schedules for corn per ton per month are as given in the table below.
120
800
1300
110
900
1200
100
1000
90
1100
80
600
1. What is the market equilibrium corn price per month and the market equilibrium number of corn demanded and supplied? Use Excel to graph this out.
2. If the local government can enforce a price-control law that sets the maximum price of $90.00, will there be a surplus or a shortage? How many tons? And how many tons will actually be sold?
3. Suppose that a new government is elected that wants to keep out the poor. It declares that the minimum price that can be charged is $110.00. If the government can enforce that price floor, will there be a surplus or a shortage? Of how many tons? And how many tons will actually be sold?
5. 4. Suppose that the government wishes to decrease the market equilibrium price by increasing the supply of corn. Assuming that demand remains unchanged, by how many tons of corn would the government have to increase the supply of corn in order to get the market equilibrium rental price to fall to $90.00?
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