Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:1. Consider the market for lattes in Milwaukee, as described below:
Price
(per latte)
$4.50
S
4.00
3.50
3.00
2.50
2.00
1.50
1.00
0.50
0 200
600
1,000
1,400
1,800
Quantity of lattes (in cups)
Suppose that Milwaukee imposes a price floor of $2.50 on lattes. Calculate each of the following
quantities, showing your work or describing how you found the answer. Please also show each
quantity on the graph.
A. Surplus/Excess Quantity.
B. Deadweight loss.
C. Consumer Surplus.
D. Producer Surplus.
E. Transfer from consumers to producers.
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