Problem 4: Competitive markets, equilibriua, and surplus. The market demand is Qd = 15 – P, and the market supply is Q = P/2. (a) Assume that the market is perfectly competitive. What are the equilibrium price and quantity? (b) Assume that the market is perfectly competitive. What is the equilibrium consumer, producer, and total surplus? (c) In order to support producers by increasing prices, the government imposes a produc- tion quota of Q = 4 units. What will the market clearing price be? At that price, what is the consumer, producer, and total surplus? What is the deadweight loss?

Problem 4: Competitive markets, equilibriua, and surplus. The market demand is Qd = 15 – P, and the market supply is Q = P/2. (a) Assume that the market is perfectly competitive. What are the equilibrium price and quantity? (b) Assume that the market is perfectly competitive. What is the equilibrium consumer, producer, and total surplus? (c) In order to support producers by increasing prices, the government imposes a produc- tion quota of Q = 4 units. What will the market clearing price be? At that price, what is the consumer, producer, and total surplus? What is the deadweight loss?

Microeconomics A Contemporary Intro

10th Edition

ISBN:9781285635101

Author:MCEACHERN

Publisher:MCEACHERN

Chapter8: An Introduction To Perfect Competition

Section: Chapter Questions

Problem 9QFR

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