Question

1. The demand and supply functions for wheat are as follows:

                           Q^D_w = 4.5 – 0.4 P

                           Q^s_w = 1.5 + 0.6 P,

where Q^s_w is the quantity supplied of wheat (in billions of bushels), Q^D_x is the quantity demanded of wheat (in billions of bushels), and P_w is the farm price of wheat (in dollars per bushel) What is the equilibrium price of wheat?

A. $8 per bushel.  

B. $6 per bushel.

C. $5 per bushel.

D. $3 per bushel.

E. none of the above.

Using the information in question #1, what is the equilibrium quantity of wheat sold?

A. 3.3 billion bushels.  

B. 3.7 billion bushels.

C. 3.9 billion bushels.

D. 2.9 billion bushels.

E. none of the above.

7. Using the information in question #1, if the price of wheat is set at $4.00 per bushel, the market will have

A. a shortage of 1 billion bushel.  

B. a surplus of 1 billion bushel.

C. a shortage of 0.6 billion bushel.

D. a surplus of 0.6 billion bushel.

E. none of the above.

8. Using the information in question #1, if the price of wheat is set at $2.00 per bushel, the market will have

A. a shortage of 1 billion bushel.  

B. a surplus of 1 billion bushel.

C. a shortage of 0.6 billion bushel.

D. a surplus of 0.6 billion bushel.

E. none of the above.

Answer 1