Suppose the demand equation is given by P=10-Q and the supply equation is given by P=2+Q. If the quantity bought and sold under a price floor is Q=2, what is the price floor?

Answer 1

To find the price floor, we need to set the quantity bought and sold under the price floor (Q) equal to 2:

Q = 2

We can substitute this value of Q into either the demand or supply equation to find the corresponding price. Using the demand equation:

P = 10 - Q
P = 10 - 2
P = 8

Therefore, the price floor is $8.