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 price support per unit and production quotas. Suppose now that the government decides to increase the number of quotas available to 72 units but it keeps the price support at the current level of $72. Calculate (I)the consumer surplus (ii) producer surplus (iii) deadweight loss
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 price support per unit and production quotas.
Suppose now that the government decides to increase the number of quotas available to 72 units but it keeps the price support at the current level of $72. Calculate
(I)the
(ii) producer surplus
(iii)
(e) which of the two options would be preferred by the producers?
(f) which of the two options will be preferred by society on the whole?
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Please only answer Questions D, E and F:
Suppose now that the government decides to increase the number of quotas available to 72 units, but it keeps the price support at the current level of $72.
d) Calculate
(1) the
(ii) the producer surplus,
(iii)
(e) Which of the two options would the producers prefer? Option 1, Option 2, or None ?
(f) Which of the two options would be preferred by society? Option 1, Option 2 or None?
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