Price 10 9 8 7 6 5 4 2 1 D 10 20 30 40 50 60 70 80 90 100 Quantity a. Suppose this market exists as a free market without any government intervention and with no market failure. What will be the outcome for the market? In other words, what price will consumers be charged and will producers receive for cach unit, how much of the good will be bought and sold, how much economic surplus will be earned by consumers, how much economic surplus will be earned by producers and how much economic surplus will be earned by society a result of the frce functioning of this market? b. What will be the impact of $4 price floor? (Please calculate new CS, PS, TS, Qs, Qd, Resource Misallocation, and DWL)
Price 10 9 8 7 6 5 4 2 1 D 10 20 30 40 50 60 70 80 90 100 Quantity a. Suppose this market exists as a free market without any government intervention and with no market failure. What will be the outcome for the market? In other words, what price will consumers be charged and will producers receive for cach unit, how much of the good will be bought and sold, how much economic surplus will be earned by consumers, how much economic surplus will be earned by producers and how much economic surplus will be earned by society a result of the frce functioning of this market? b. What will be the impact of $4 price floor? (Please calculate new CS, PS, TS, Qs, Qd, Resource Misallocation, and DWL)
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Price
10
9
8
7
6.
5
4
3
1
10
20
30 40
50 60
70 80 90 100 Quantity
a. Suppose this market exists as a free market without any government intervention and with no
market failure. What will be the outcome for the market? In other words, what price will
consumers be charged and will producers receive for cach unit, how much of the good will be
bought and sold, how much economic surplus will be earned by consumers, how much economic
surplus will be earned by producers and how much economic surplus will be earned by society as
a rcsult of the frcc functioning of this markct?
b. What will be the impact of $4 price floor? (Please calculate new CS, PS, TS, Qs, Qd, Resource
Misallocation, and DWL)
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