The Chief Medical Officer has advised the government that consumption of widget-corn improves the survival rate of COVID-19 by 20%. Suppose the supply and demand functions for widget-corn are: Q° = 100 - 5P (1) Q$ = 5P. Pis the price in dollar and Q is the quantity in kilograms. (2) c. Having confirmed the positive impact of widget-corn consumption on COVID-19 patients, the government has ordered widget-corn sellers to charge $5 per kilogram. (i) (ii) (iii) (iv) What type of price regulation policy is this? Briefly explain. Calculate the impact of the policy on the quantity of widget-corn supplied and demanded. Explain the impact of the policy consumer surplus, producer surplus, and total economic surplus. Is the outcome of the government's policy efficient and, therefore, maintained or abandoned? Expiain in detail.

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The Chief Medical Officer has advised the government that consumption of widget-corn improves the survival rate of COVID-19 by 20%. Suppose
the supply and demand functions for widget-corn are:
Q° = 100 - 5P
(1)
Q$ = 5P.
Pis the price in dollar and Q is the quantity in kilograms.
(2)
c. Having confirmed the positive impact of widget-corn consumption on COVID-19 patients, the government has ordered widget-corn
sellers to charge $5 per kilogram.
(i)
(ii)
(iii)
(iv)
What type of price regulation policy is this? Briefly explain.
Calculate the impact of the policy on the quantity of widget-corn supplied and demanded.
Explain the impact of the policy consumer surplus, producer surplus, and total economic surplus.
Is the outcome of the government's policy efficient and, therefore, maintained or abandoned? Expiain in detail.
Transcribed Image Text:The Chief Medical Officer has advised the government that consumption of widget-corn improves the survival rate of COVID-19 by 20%. Suppose the supply and demand functions for widget-corn are: Q° = 100 - 5P (1) Q$ = 5P. Pis the price in dollar and Q is the quantity in kilograms. (2) c. Having confirmed the positive impact of widget-corn consumption on COVID-19 patients, the government has ordered widget-corn sellers to charge $5 per kilogram. (i) (ii) (iii) (iv) What type of price regulation policy is this? Briefly explain. Calculate the impact of the policy on the quantity of widget-corn supplied and demanded. Explain the impact of the policy consumer surplus, producer surplus, and total economic surplus. Is the outcome of the government's policy efficient and, therefore, maintained or abandoned? Expiain in detail.
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