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b. Now suppose the government guarantees milk producers a price of $2 per litre and promises to buy any amount of milk that the producers cannot sell. What are the quantity demanded and quantity supplied at this guaranteed price?

by Essaynice Tutors | Sep 8, 2023 | economics

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(I)Consider the market for milk in Saskatchewan. If p is the price of milk (cents per litre) and Qis the quantity of litres (in millions per month), suppose that the demand and supply curves formilk are given by:

Demand: p = 225 -15QD

Supply: p = 25 + 35QS

a.Assuming there is no government intervention in this market, what is the equilibrium price and quantity?

Equilibrium Price = $165 Quantity = 4Liters

Please answer B.