Suppose that the demand for cantaloupes is p=120-3Qd , where is the price per pound (in cents) of cantaloupe and Qd is the quantity demanded per year (in millions of pounds). Suppose that the supply curve for cantaloupes is P=5Qs where Qs is the quantity is supplied per year (in millions of pounds).
a) If the current actual price of cantaloupes is 85 cents per pound, would you expect the price to rise or fall? If so, by how much? Provide reasons for your answer.
b) Suppose the government imposed a price floor of 80 cents per pound of cantaloupes. How much would then be supplied? Calculate the resulting surplus. Provide a diagram to illustrate your answer.