Question

a. Wheat is an important agricultural commodity, and the wheat market has beenstudied extensively by agricultural economists. From statistical studies, we knowthat for 1981 the supply curve for wheat was approximately as: Supply: QS = 1800+240P, where price is measured in nominal dollars per bushel and quantities inmillions of bushels per year. These studies also indicate that in 1981, the demandcurve for wheat was. Demand: QD = 3550 - 266P. Determine the market-clearingprice and quantity of wheat for 1981.- Ilu​

Answer 1

The market equilibrium occurs when Q_d=Q_sQ

d

=Q

s

, then:

3550-266P=1800+240P,3550−266P=1800+240P,

1750=506P,1750=506P,

P=\$3.46.P=$3.46.

Therefore, the market-clearing price of the wheat is $3.46.

Finally, substituting PP into Q_dQ

d

we can find quantity of the wheat:

Q=3550-266\cdot\$3.46=2630.Q=3550−266⋅$3.46=2630.

Answer 2

Answer:

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