Assume the market of non-medical masks can be described by the following equations: Demand: QD= 20 - P Supply: QS=2P-10 Where the quantity QP and QS are in millions, and price P is in dollars. Suppose all the masks are imported, and government decided to set a quota at 5 million units. a) Compute the pre-quota equilibrium price and quantity and illustrate your answers graphically. b) In your graph of a) Clearly show the con umer surplus (CS) and producer surplus (PS) before and after the quota. c) Show the dead weight loss (DWL) in the graph and calculate it.
Assume the market of non-medical masks can be described by the following equations: Demand: QD= 20 - P Supply: QS=2P-10 Where the quantity QP and QS are in millions, and price P is in dollars. Suppose all the masks are imported, and government decided to set a quota at 5 million units. a) Compute the pre-quota equilibrium price and quantity and illustrate your answers graphically. b) In your graph of a) Clearly show the con umer surplus (CS) and producer surplus (PS) before and after the quota. c) Show the dead weight loss (DWL) in the graph and calculate it.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Q4. Assume the market of non-medical masks can be described by the following equations:
Demand: QD= 20 - P
Supply: QS=2P-10
Where the quantity QP and QS are in millions, and price P is in dollars. Suppose all the masks are imported, and government decided to set a quota at 5 million units.
a) Compute the pre-quota equilibrium price and quantity and illustrate your answers graphically.
b) In your graph of a) Clearly show the con umer surplus (CS) and producer surplus (PS) before and after the quota.
c) Show the dead weight loss (DWL) in the graph and calculate it.
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