Due to good weather, there is an increase in the demand for the good. The new demand equation is Qd = 190 – 2P. The government is trying to decide between two options: • Maintain the number of quotas and let the market adjust, or • Maintain the price support and increase the number of quotas. Suppose that the government decides to maintain the number of quotas and let the market adjust. (c) Calculate the (i) price observed in the market, HINT: Sketch the supply and demand equations. Answer: (ii) the consumer surplus,
Due to good weather, there is an increase in the demand for the good. The new demand equation is Qd = 190 – 2P. The government is trying to decide between two options: • Maintain the number of quotas and let the market adjust, or • Maintain the price support and increase the number of quotas. Suppose that the government decides to maintain the number of quotas and let the market adjust. (c) Calculate the (i) price observed in the market, HINT: Sketch the supply and demand equations. Answer: (ii) the consumer surplus,
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
![A market has a demand function given by the equation Qd = 180 – 2P, and a supply function
given by the equation Qs = -15 + P. The market is government-regulated with a price support per
unit and production quotas. (NOTE: A production quota is a restriction on the quantity of the
good that can be produced. Firms are not allowed to produce more than the quota)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F42c6b28b-a5e5-40a9-95eb-ef9e8c8d2867%2F0d5bea4f-f8c9-427e-b46e-993f466187ba%2F1lr3ra9_processed.png&w=3840&q=75)
Transcribed Image Text:A market has a demand function given by the equation Qd = 180 – 2P, and a supply function
given by the equation Qs = -15 + P. The market is government-regulated with a price support per
unit and production quotas. (NOTE: A production quota is a restriction on the quantity of the
good that can be produced. Firms are not allowed to produce more than the quota)
![Due to good weather, there is an increase in the demand for the good. The new demand equation
is Qd = 190 – 2P. The government is trying to decide between two options:
• Maintain the number of quotas and let the market adjust, or
• Maintain the price support and increase the number of quotas.
Suppose that the government decides to maintain the number of quotas and let the market
adjust.
(c) Calculate the
(i) price observed in the market,
HINT: Sketch the supply and demand equations.
Answer:
(ii) the consumer surplus,
Answer:](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F42c6b28b-a5e5-40a9-95eb-ef9e8c8d2867%2F0d5bea4f-f8c9-427e-b46e-993f466187ba%2Fm7s2qa_processed.png&w=3840&q=75)
Transcribed Image Text:Due to good weather, there is an increase in the demand for the good. The new demand equation
is Qd = 190 – 2P. The government is trying to decide between two options:
• Maintain the number of quotas and let the market adjust, or
• Maintain the price support and increase the number of quotas.
Suppose that the government decides to maintain the number of quotas and let the market
adjust.
(c) Calculate the
(i) price observed in the market,
HINT: Sketch the supply and demand equations.
Answer:
(ii) the consumer surplus,
Answer:
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