Suppose the credit market in Triumph, Illinois is described by the schedule shown below. Local financial regulators have set the maximum interest rate for commercial credit at 9%.Interest RateQuantity of credit suppliedQuantity of credit demanded5%$800,000$3,500,0007%$1,100,000$3,100,0009%$1,500,000$2,600,00011%$2,000,000$2,000,00013%$2,600,000$1,300,00015%$3,300,000$500,000Illustrate this market in a supply and demand graph.What is the market equilibrium interest rate?How many fewer borrowers are there at the mandated interest rate than there would be at equilibrium.

Equilibrium is where demand curve intersects supply curve. Equilibrium interest rate is determined…

Answered: Suppose the credit market in Triumph,…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Suppose the credit market in Triumph, Illinois is described by the schedule shown below. Local financial regulators have set the maximum interest rate for commercial credit at 9%.

Interest Rate	Quantity of credit supplied	Quantity of credit demanded
5%	$800,000	$3,500,000
7%	$1,100,000	$3,100,000
9%	$1,500,000	$2,600,000
11%	$2,000,000	$2,000,000
13%	$2,600,000	$1,300,000
15%	$3,300,000	$500,000

Illustrate this market in a supply and demand graph.
What is the market equilibrium interest rate?
How many fewer borrowers are there at the mandated interest rate than there would be at equilibrium.

Definition Video Formula Definition Phenomenon in which market supply and demand balance each other. Market equilibrium is the economic state in which the market demand curve intersects the market supply curve, giving us the equilibrium price and equilibrium quantity for which a commodity can be sold and purchased in an economy. When market equilibrium is achieved, it suggests that all resources have been allocated efficiently and that there is just a distribution of income and resources in the economy. Video Formula

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