Suppose that the demand curve for wheat is Upper Q equals 120 minus 10 p and the supply curve is Upper Q equals 10 p. The government imposes a price ceiling of p overbar equals $ 4 per unit. a. How do the equilibrium price and quantity change? (round quantities to the nearest integer and round prices to the nearest penny) The equilibrium quantity without the price ceiling is nothing and the price without the price ceiling is $ nothing. The equilibrium quantity with the price ceiling is nothing.

$6; 60 units

40 units

Explanation:

Given that,

Demand curve: Q = 120 - 10P

Supply curve: Q = 10P

Government imposes a price ceiling = $4 per unit

Without price ceiling,

At equilibrium,

Supply = Demand

10P = 120 - 10P

20P = 120

P = $6 (equilibrium price)

Equilibrium quantity = 120 - (10 × 6)

                                  = 120 - 60

                                  = 60 units

With price ceiling of $4 per unit,

Equilibrium quantity:

= 10P

= 10 × 4

= 40 units

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