Suppose the government implemented a price floor at $7 per cup of coffee.Identify the new quantities demanded and supplied and any surplus or shortage of coffee. What will the new quantity be in the coffee market?What is the total surplus with the price floor? How much deadweight loss was created, if any?3. What is consumer and producer surplus? Did either the consumer or producer surplus change? In what direction? Discuss in your group why consumer and producer surplus did or did not change.

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Answered: Suppose the government implemented a…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Suppose the government implemented a price floor at $7 per cup of coffee.
1. Identify the new quantities demanded and supplied and any surplus or shortage of coffee. What will the new quantity be in the coffee market?
2. What is the total surplus with the price floor? How much deadweight loss was created, if any?

3. What is consumer and producer surplus? Did either the consumer or producer surplus change? In what direction? Discuss in your group why consumer and producer surplus did or did not change.

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