Question 6 A market has a demand function given by the equation Qd = 180 – 2P, and a supply function given by the equation Qs = -15 + P. The market is government-regulated with a price support per unit and production quotas. (NOTE: A production quota is a restriction on the quantity of the good that can be produced. Firms are not allowed to produce more than the quota) (a) If the price is set at $72 per unit, what production quota is needed to make sure there are no shortages or surpluses? HINT: Sketch the supply and demand equations. Answer: Considering the price support and the quota, calculate (i) the consumer surplus, Answer: (ii) the producer surplus, Answer:
Question 6 A market has a demand function given by the equation Qd = 180 – 2P, and a supply function given by the equation Qs = -15 + P. The market is government-regulated with a price support per unit and production quotas. (NOTE: A production quota is a restriction on the quantity of the good that can be produced. Firms are not allowed to produce more than the quota) (a) If the price is set at $72 per unit, what production quota is needed to make sure there are no shortages or surpluses? HINT: Sketch the supply and demand equations. Answer: Considering the price support and the quota, calculate (i) the consumer surplus, Answer: (ii) the producer surplus, Answer:
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Question 6
A market has a demand function given by the equation Qd = 180 – 2P, and a supply function given by the equation Qs = -15 + P. The
market is government-regulated with a price support per unit and production quotas. (NOTE: A production quota is a restriction on
the quantity of the good that can be produced. Firms are not allowed to produce more than the quota)
(a) If the price is set at $72 per unit, what production quota is needed to make sure there are no shortages or surpluses?
HINT: Sketch the supply and demand equations.
Answer:
Considering the price support and the quota, calculate
(i) the consumer surplus,
Answer:
(ii) the producer surplus,
Answer:
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