Question 19N.3.HL.TZ0.f.ii

The market for corn on the island of Nissos is perfectly competitive. The demand and supply for corn in Nissos are given by the functions

$Qd=10-0.5P$

$Qs=-2+P$

where $Qd$ is the quantity of corn demanded per month in millions of kilograms (kg), $Qs$ is the quantity of corn supplied per month in millions of kg and $P$ is the price per kg of corn in dollars ($). 

Advisors to the government of Nissos suggest setting a price floor.

The monthly corn surplus created must be purchased by the government of Nissos.