Suppose the market for pizzas in the U.S. is perfectly competitive and is characterized by the following demand and supply equations (Q = quantity and P = Price): Demand for pizza: Qd = 100 – P Supply of pizza: Qs = 2P − 50 A) Find the market clearing equilibrium price P* and quantity Q*. B) Find the the consumer surplus and producer surplus at the equilibrium. C) Suppose that the U.S. imposes a price ceiling at $40. What is the quantity demanded by consumer (Qd’)? What is the quantity supplied by suppliers (Qs’)?
Suppose the market for pizzas in the U.S. is
- Demand for pizza: Qd = 100 – P
- Supply of pizza: Qs = 2P − 50
A) Find the
B) Find the the
C) Suppose that the U.S. imposes a
D) Suppose that the U.S. imposes a price ceiling of $40. Is there a shortage or surplus for pizzas?
E) Suppose that the U.S. imposes a price ceiling of $40. What is the new CS’ and PS’? Assuming that the government purchases/provides the surplus/shortage. Under the same assumption, what is the
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