The Reinheitsgebot is a set of laws established in the 1500s that regulate the production and sale of beer in Germany. Among its provisions, the edict set maximum prices that brewers could charge at various times of the year: "From Michaelmas to Georgi, the price for one [Bavarian Liter] is not to exceed one Pfennig Munich value." Cheap beer — this must be a great thing for consumers. Suppose that the demand for beer is given by QD=6,000−1,500P , and the supply of beer is given by QS=−1,000+2,000P.
1. Accurately graph the demand, supply and price ceiling curves.2. Without the price ceiling of 1-Pfennig, What is the equilibrium price of beer?
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