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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

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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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
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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