| Question | 4. The market for truffles is characterized by a demand function of the form QP=10,000-40P and a supply function of the form QS=60P-2000, where P is the price per pound. a) Determine the equilibrium values of the price per pound and the number of pounds transacted. b) The government wishes to raise the revenues accruing to truffle producers and implements a quota in the market at 4000 pounds. Determine the new price and market output. Did the policy succeed in raising producer revenues? Explain. |
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| Subject | economy |
