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, orMaintain the price support and increase the number of quotas.Suppose now that the government decides to increase the number of quotas available to 72 units, but it keeps the price support at the current level of $72. Calculate: i) the consumer Surplusii) the producer surplusiii) deadweight lossHINT: Sketch the supply and demand equations. Which of the two options would be preferred by the producers?Which of the two options would be preferred by society as a whole? Suppose that the government imposes a tax on cigarettes. Use the diagram below to answer the questions. Dis the demand curve before tax, S is the supply curve before tax and S, is the supply curve after the tax.Price181210710 12Qua(a) For the market for cigarettes without the tax. Indicate:(i)Price paid by consumers(ii)Price paid by producers(iii)Quantity of cigarettes sold(iv)Buyer's reservation price(v)Seller's reservation price Carefully explain what is happening in the following markets. Indicate the impact if any on demand, supply,price and quantityScenario 3:Market for lemonadeTHINK PEOPLEWILL SUSPECT THATWERE IN CAHOOSPMAYBE I SHOLDMoVE DOWN THESTREET SOME.FreePopcornLenonade$50extresalty64 x 306Impact on demand Choose.Impact on supplyChoose.Impact on priceChoose.Impact on quantity Choose.

Note . Only solving first 3 subpart post other part separately please.

Answered: Due to good weather, there is an…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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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 now that the government decides to increase the number of quotas available to 72 units, but it keeps the price support at the current level of $72. Calculate:
i) the consumer Surplus
ii) the producer surplus
iii) deadweight loss

HINT: Sketch the supply and demand equations.

Which of the two options would be preferred by the producers?

Which of the two options would be preferred by society as a whole?