Suppose the market supply for Good X is given by QXS = -100 + 5P Compute and illustrate with completely labelled diagram the producer surplus if the equilibrium price of X is $100 per unit (show the relevant calculation)

Suppose the market supply for Good X is given by QXS = -100 + 5P Compute and illustrate with completely labelled diagram the producer surplus if the equilibrium price of X is $100 per unit (show the relevant calculation)

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter3: Supply And Demand: Theory

Section3.2: Supply

Problem 1ST

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Question

a. Suppose the market supply for Good X is given by Q_X^S = -100 + 5P Compute and illustrate with completely labelled diagram the producer surplus if the equilibrium price of X is $100 per unit (show the relevant calculation).

b. The daily market demand and supply for chicken in Kuala Lumpur is given by:

= 16,000 – 1,000P

= 2,000 + 1,000P

The quantity and price are measured in tonnes and RM, respectively.

i. Determine the equilibrium quantity and price in the above market,

ii. Explain what will happen if the government imposes a price ceiling of RM10 on the chicken.

Video Definition Video Definition Government regulation setting a maximum price a business may charge for a given good or service. A price ceiling itself does not cause demand or supply to change. It is simply a mechanism used to set a price that can be legally charged in the market. Price ceilings are often implemented during times of crisis to avoid price gouging.

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