please do part d QUESTION 2At the current market equilibrium, the price of a good equals 40 and the quantity equals 10units. At this equilibrium, the price elasticity of supply is 2. Assume that the supply curve islinear.A. Use the price elasticity and market equilibrium to find the supply curve. (Hint: thefunctional form of the supply curve is q = a + (Aq/Ap)p. Find the value of Aq/Apfirst and then calculate the value of a.)B. Calculate the producer surplus in the market.C. Suppose the market (inverse) demand curve is given by the following equation:p=25 - q +0.11 where q is the quantity demanded at price p when the incomelevel is I. Assume that the income level is 250.1. Using a two-dimensional diagram for price and quantity, show that the marketequilibrium is constructed at the price and the quantity described above.II. Calculate the consumer surplus and the social surplus.D. (Target Pricing) A government plans to enact a new policy that guarantees sellers aprice of 45.1. Calculate the expected CS and PS with the policy.II. Calculate the government surplus and the social surplus.III. Compare the social surpluses with and without the policy and find thedeadweight loss.IV. Explain why the deadweight loss is generated. What is your opinion on the policybased on the results?

At the current market equilibrium, the price of a good equals 40 and the quantity equals 10 units. At this equilibrium, the price elasticity of supply is 2. Assume that the supply curve is linear. A. Use the price elasticity and market equilibrium to find the supply curve. (Hint: the functional form of the supply curve is q = a + (Aq/Ap)p. Find the value of Aq/Ap first and then calculate the value of a.) B. Calculate the producer surplus in the market. C. Suppose the market (inverse) demand curve is given by the following equation: p=25 - q +0.11 where q is the quantity demanded at price p when the income level is I. Assume that the income level is 250. I. Using a two-dimensional diagram for price and quantity, show that the market equilibrium is constructed at the price and the quantity described above. II. Calculate the consumer surplus and the social surplus. D. (Target Pricing) A government plans to enact a new policy that guarantees sellers a price of 45. 1. Calculate the expected CS and PS with the policy. II. Calculate the government surplus and the social surplus. III. Compare the social surpluses with and without the policy and find the deadweight loss. IV. Explain why the deadweight loss is generated. What is your opinion on the policy based on the results?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Question

please do part d

Expert Solution

Introduction

Target pricing is a pricing strategy in which a company sets the selling price of its product or service based on the desired profit margin. The target price is calculated by subtracting the desired profit margin from the expected selling price. This approach is commonly used in cost accounting and is often used in manufacturing and retail industries.

The goal of target pricing is to ensure that the company is able to make a profit while remaining competitive in the market. It is often used by companies that operate in highly competitive markets, where small differences in pricing can have a significant impact on sales and profitability.

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions