You are given the following market data for apples. Demand is ...

[bobypop]

You are given the following market data for apples.
 
  Demand is represented by: P = 12 - 0.01Q
   Supply is represented by: P = 0.02Q
   where P= price per bushel, and Q=quantity.
 
  a. Calculate the equilibrium price and quantity.
  b. Suppose the government guaranteed producers a price of 10 per bushel. What would be the effect on quantity supplied? Provide a numerical value.
  c. By how much would the 10 price change the quantity of apples demanded? Provide a numerical value.
  d. Would there be a shortage or surplus of apples?
  e. What is the size of this shortage or surplus? Provide a numerical value.

Question 2

Laura's Pizza Place incurs 800,000 per year in explicit costs and 100,000 in implicit costs. The restaurant earns 1.3 million in revenues. Based on this information, what is the accounting profit for Laura's Pizza Place?
 
  A) 200,000 B) 400,000 C) 500,000 D) 900,000

[Ashley I]

Answer to Question 1

a. Q = 400 bushels, P = 8.
b. Quantity supplied would increase to 500 bushels.
c. Quantity demanded would fall to 200 bushels.
d. There would be a surplus.
e. Surplus = 300 bushels.

Answer to Question 2

C