Final answer:
A price floor set at $32 would not be a binding price floor because it is below the equilibrium price of $40. A price of $32 would be a binding price floor if it's above the equilibrium price, which can be determined by equating the given demand and supply equations.
Step-by-step explanation:
A price floor is the minimum price set by the government for a certain good or service. In this case, our price floor is $32. To determine if it is binding, we compare it to the equilibrium price. If the price floor is set above the equilibrium price, it will be binding. In this case, the equilibrium price is found by setting the quantity demanded equal to the quantity supplied:
140 - 10q = 10 + 3q
Solving for q, we find q = 10. Substituting this value back into either the demand or supply equation, we can find the equilibrium price: p = 140 - 10(10) = $40.
Since the price floor of $32 is below the equilibrium price of $40, it is not binding and will not affect the market outcome.
A price of $32 would be a binding price floor if it's above the equilibrium price, which can be determined by equating the given demand and supply equations. A binding price floor leads to a surplus in the market where the quantity supplied is greater than the quantity demanded.
A price of $32 would be considered a binding price floor if it is set above the equilibrium price. To determine whether the $32 price is a binding price floor, we first need to find the equilibrium by setting the demand equation D:p=140−10q equal to the supply equation S:p=10+3q. Solving for q gives us the equilibrium quantity, and then we can plug that back into either equation to find the equilibrium price.
Substituting p with $32 in the demand equation gives us the quantity demanded, and doing the same in the supply equation gives us the quantity supplied. If the quantity supplied exceeds the quantity demanded, then $32 would indeed be a binding price floor, leading to a surplus of goods in the market. This imbalance is how a price floor set above the equilibrium level typically affects quantity demanded and quantity supplied.