FRQ #1 * The graph below shows the market for widgets. The government is considering intervening in this market. $40 Price $30 $20 $10 Demand Supply- 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 Quantity (a) Calculate the total producer surplus at the market equilibrium price and quantity. Show your work. (b) If the government imposes a price floor at $16, is there a shortage, a surplus, or neither? Explain. (c) If instead the government imposes a price ceiling at $12, is there a shortage, a surplus, or neither? Explain. (d) If instead the government restricts the market output to 10 units, calculate the deadweight loss. Show your work. (e) Assume the price decreases from $20 to $12. (i) (ii) Calculate the price elasticity of demand. Show your work. In this price range, is demand perfectly elastic, relatively elastic, unit elastic, relatively inelastic, or perfectly inelastic? Your answer CRO #2 Takeo of your graph or the question and upload it when you 5 pc
FRQ #1 * The graph below shows the market for widgets. The government is considering intervening in this market. $40 Price $30 $20 $10 Demand Supply- 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 Quantity (a) Calculate the total producer surplus at the market equilibrium price and quantity. Show your work. (b) If the government imposes a price floor at $16, is there a shortage, a surplus, or neither? Explain. (c) If instead the government imposes a price ceiling at $12, is there a shortage, a surplus, or neither? Explain. (d) If instead the government restricts the market output to 10 units, calculate the deadweight loss. Show your work. (e) Assume the price decreases from $20 to $12. (i) (ii) Calculate the price elasticity of demand. Show your work. In this price range, is demand perfectly elastic, relatively elastic, unit elastic, relatively inelastic, or perfectly inelastic? Your answer CRO #2 Takeo of your graph or the question and upload it when you 5 pc
Economics (MindTap Course List)
13th Edition
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Roger A. Arnold
Chapter4: Prices: Free, Controlled, And Relative
Section: Chapter Questions
Problem 4WNG
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Question
Transcribed Image Text:FRQ #1 *
The graph below shows the market for widgets. The government is considering intervening in this market.
$40
Price
$30
$20
$10
Demand
Supply-
0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32
Quantity
(a) Calculate the total producer surplus at the market equilibrium price and quantity. Show your work.
(b) If the government imposes a price floor at $16, is there a shortage, a surplus, or neither? Explain.
(c) If instead the government imposes a price ceiling at $12, is there a shortage, a surplus, or neither? Explain.
(d) If instead the government restricts the market output to 10 units, calculate the deadweight loss.
Show your work.
(e) Assume the price decreases from $20 to $12.
(i)
(ii)
Calculate the price elasticity of demand. Show your work.
In this price range, is demand perfectly elastic, relatively elastic, unit elastic, relatively inelastic,
or perfectly inelastic?
Your answer
CRO #2 Takeo
of your graph or the question and upload it when you
5 pc
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