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.) (b) Considering the price support and the quota, calculate (i) the consumer surplus, (ii) the producer surplus, (iii) deadweight loss,

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.) (b) Considering the price support and the quota, calculate (i) the consumer surplus, (ii) the producer surplus, (iii) 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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