2. In Application Question 5 of Chapter 3, we examined the market for DVDs where the supply and demand curves are given by Q = 3P and Q = 60-2P, respectively. Refer to the following diagram. $ 30 S Price 12 D 0 36 Quantity 60 (a) If the government imposes a price ceiling of $5 in this market, what will happen to the positions of the demand and supply curves? (b) Calculate the consumer surplus at the equilibrium price. (c) Calculate the producer surplus at the equilibrium price. Now suppose that a $6 per unit maximum price is imposed in this market. The diagram shows the impact on quantity demanded and quantity supplied. (d) Calculate the consumer surplus. (Careful!) (e) Calculate the producer surplus. (f) Calculate the deadweight loss.

2. In Application Question 5 of Chapter 3, we examined the market for DVDs where the supply and demand curves are given by Q = 3P and Q = 60-2P, respectively. Refer to the following diagram. $ 30 S Price 12 D 0 36 Quantity 60 (a) If the government imposes a price ceiling of $5 in this market, what will happen to the positions of the demand and supply curves? (b) Calculate the consumer surplus at the equilibrium price. (c) Calculate the producer surplus at the equilibrium price. Now suppose that a $6 per unit maximum price is imposed in this market. The diagram shows the impact on quantity demanded and quantity supplied. (d) Calculate the consumer surplus. (Careful!) (e) Calculate the producer surplus. (f) Calculate the deadweight loss.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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