The chief medical officer has advised the government that consumption of widger-corn improves the survival rate of COVID-19 patients by 20%. Suppose the supply and demand functions for widget-corn are: Quantity demanded=100-5P Quantity Supplies= 5P Having confirmed the positive impact of widget-corn consumption on COVID-19 patients, the government has ordered sellers to charge $5 per kilogram. i. What type of price regulation policy is this? ii. Explain the impact of policy on consumer surplus, producer surplus and total economic surplus when iii. Is the outcome of the government's policy efficient?
The chief medical officer has advised the government that consumption of widger-corn improves the survival rate of COVID-19 patients by 20%. Suppose the supply and demand functions for widget-corn are: Quantity demanded=100-5P Quantity Supplies= 5P Having confirmed the positive impact of widget-corn consumption on COVID-19 patients, the government has ordered sellers to charge $5 per kilogram. i. What type of price regulation policy is this? ii. Explain the impact of policy on consumer surplus, producer surplus and total economic surplus when iii. Is the outcome of the government's policy efficient?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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The chief medical officer has advised the government that consumption of widger-corn improves the survival rate of COVID-19 patients by 20%. Suppose the
Quantity demanded=100-5P
Quantity Supplies= 5P
Having confirmed the positive impact of widget-corn consumption on COVID-19 patients, the government has ordered sellers to charge $5 per kilogram.
i. What type of price regulation policy is this?
ii. Explain the impact of policy on
iii. Is the outcome of the government's policy efficient?
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