A market has a demand function given by the equation Qd = 180-2P, and a supply function is given by the equation Qs = -15 + P. The market is government-regulated, with price support per unit and production quotas. (NOTE: A production quota restricts the quantity of the good that can be produced. Firms are not allowed to produce more than the quota) (a) If the price is $72 per unit, what production quota is needed to ensure no shortages or surpluses? (HINT: Sketch the supply and demand equations.) 36 (b) Considering the price support and the quota, calculate (1) the consumer surplus, 324 (ii) the producer surplus, 1404 (iii) deadweight loss, 147
A market has a demand function given by the equation Qd = 180-2P, and a supply function is given by the equation Qs = -15 + P. The market is government-regulated, with price support per unit and production quotas. (NOTE: A production quota restricts the quantity of the good that can be produced. Firms are not allowed to produce more than the quota) (a) If the price is $72 per unit, what production quota is needed to ensure no shortages or surpluses? (HINT: Sketch the supply and demand equations.) 36 (b) Considering the price support and the quota, calculate (1) the consumer surplus, 324 (ii) the producer surplus, 1404 (iii) deadweight loss, 147
Chapter14: Monopoly
Section: Chapter Questions
Problem 14.8P
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Question
Calculate:
a. The price obersved in the market
b. The
c. The
d. The
NB: SHOW ALL WORKINGS AND GRAPH
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