** PLEASE LOOK AT BOTH IMAGES, THEY COMPLEMENT EACHOTHER ** On this educational page, we pose a scenario for economic analysis involving a price ceiling. The scenario is as follows:---### Scenario: Analyzing a Price CeilingSuppose we’re still analyzing a price ceiling of $ P = \$70 $. What is the Consumer Surplus after the price floor?#### Options:a. CS = $5500 b. CS = $3600 c. CS = $8200 d. CS = $2880 e. None of the above ---This exercise challenges individuals to understand the concept of Consumer Surplus in the context of governmental price controls. The answer requires an understanding of how price ceilings and floors impact market equilibrium and consumer benefits. **Note:** There are no graphs or diagrams accompanying this question. ### Demand and Supply Functions for BicyclesIn the context of market economics, the demand and supply for bicycles can be represented by the following equations:- **Demand Function**: $ Q^d = 1000 - 10P $- **Supply Function**: $ Q^s = 2P - 20 $Where:- $ Q^d $ represents the quantity demanded,- $ Q^s $ represents the quantity supplied,- $ P $ represents the price of bicycles.**Explanation:**- The demand function $ Q^d = 1000 - 10P $ indicates that as the price of bicycles (P) increases, the quantity demanded (Q^d) decreases. The negative coefficient (-10) shows the inverse relationship between price and demand.- The supply function $ Q^s = 2P - 20 $ suggests that as the price of bicycles (P) increases, the quantity supplied (Q^s) increases. The positive coefficient (2) demonstrates the direct relationship between price and supply.These functions help in understanding how the market reaches equilibrium, where the quantity demanded equals the quantity supplied ( $ Q^d = Q^s $ ).For graphical representation:- The demand curve usually slopes downwards from left to right.- The supply curve typically slopes upwards from left to right.At the point where these two curves intersect, the market equilibrium is achieved, determining the equilibrium price and quantity.

Here, demand function and supply function are given with the price ceiling at $70.

Answered: Suppose we're still analyzing a price…

Suppose we're still analyzing a price ceiling of P=$70. What is the Consumer Surplus after the pric floor? a. CS=$5500 b. CS=$3600 C. CS=$8200 d. CS=$2880 e. None of the above

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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