The widget industry is perfectly competitive. The industry demand and supply functions for widgets are given below. Qd = 424 40PQs = 40 + 8P
a. What is the equilibrium price and quantity for the industry?
b. If the government establishes a price floor of $9, explain what will result in terms of excess demand or supply.
c. If the government establishes a price ceiling of $6, explain what will result in terms of excess demand or supply.
d. Assume the supply curve shifts to Qs = 34 + 12PWhat is the new equilibrium price and quantity?
e. Assume in addition to the supply curve shifting, the demand curve shifts to Qd = 484 38PWhat happens to equilibrium price and output?