Consider a market where supply and demand are given by QXS = -14 + Px and Qxd=85 - 2Px. Suppose the government imposes price floor of $38, and agrees to purchase and discard any and all units consumers do not buy at the floor price of $38 per unit. Instructions: Enter your responses rounded to the nearest penny (two decimal places). a. Determine the cost to the government of buying firms' unsold units. $ 570 b. Compute the lost social welfare (deadweight loss) that stems from the $38 price floor. $ 144

Consider a market where supply and demand are given by QXS = -14 + Px and Qxd=85 - 2Px. Suppose the government imposes price floor of $38, and agrees to purchase and discard any and all units consumers do not buy at the floor price of $38 per unit. Instructions: Enter your responses rounded to the nearest penny (two decimal places). a. Determine the cost to the government of buying firms' unsold units. $ 570 b. Compute the lost social welfare (deadweight loss) that stems from the $38 price floor. $ 144

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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