Homework Help Forum: economics

Posted by nia on Tuesday, October 27, 2009 at 8:50pm.

if demand=500-p and supply=300+p what is equlibrium price/quantity if there is a quota restricting more than 50 units to be sold?

• economics - economyst, Wednesday, October 28, 2009 at 9:52am

  With the quota, do you mean "NO more than 50"? Without the quota, the equilibrium price and quantity would be where supply=demand or (500-p)=(300+p) -- solve or p. I get p=100, ergo Qd=Qs=400. If more than 50 must be sold, no problemo. If no more than 50, and the quota is enforced, then price will go to 450 and some lucky sellers will make a bundle.

  
  

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