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 that the government decides to maintain the number of quotas and let the market adjust. Calculate:ii) the consumer surplusiii) the producer surplusiv) dead weight 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? 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. Carefully explain what is happening in the following markets. Indicate the impact if any on demand, supply,price and quantityScenario 1:Market for 21 ft Ladders$21-FOOTLADDERRENTALSBORDERFENCEOPENImpact on demand Choose.Impact on supplyChoose.Impact on priceChoose.Impact on quantity Choose..

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ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

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 that the government decides to maintain the number of quotas and let the market adjust. Calculate:
ii) the consumer surplus
iii) the producer surplus
iv) dead weight 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?