Q1. The market demand and supply functions for pork are: QD = 2,000 - 500P and QS = 800 + 100P. To help pork producers, the U.S. Congress is considering legislation that would put a price floor at $2.25 per unit. If this price floor is employed, explain how many units of pork will the government be forced to buy to keep the price at $2.25? How much will the government spend in total? How much does producer surplus increase?
Q2. Suppose there are two events, A and B. A and B are mutually exclusive. P (A) =.4, P (B)=.5. What is P (A'∩B')?