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East Carolina University
Economics 2113
Spring Semester 2009
Prof. Augusto Nieto Barthaburu
Problem Set 4
Chapter 5 Problems: 1, 2, 3, 4, 5.
Chapter 6 Problems: 1, 2.
Additional Problems:
1. Suppose that the supply curve for wheat is given by QS=10P-10 and suppose that the
demand curve for wheat is given by QD=200-20P.
a. Find the equilibrium price and quantity of wheat.
b. Sketch a picture of the supply curve and the demand curve. Be sure to label i) both
axes, ii) the y-intercept both curves, iii) the slope of both curves, and iv) the equilibrium
price and quantity. Compute the consumer and producer surplus at the equilibrium price
and quantity.
c. Concerned about rising food prices, suppose that the government introduces a
maximum price (price ceiling) of $5. What will be the quantity of wheat bought and sold
on the market at that price?
d. Is this new quantity economically efficient? Explain.
e. On the graph you drew in part c, label producer and consumer surplus after the
introduction of the maximum price.