The demand and supply functions for basic cable TV in the local market are given as:QD = 200,000 – 4,000PQS =20,000 + 2,000P.Determine the equilibrium price and quantity that will prevail in an unregulated market.Calculate the consumer surplus, producer surplus, and total surplus in this market. Is this market efficient? Why or why not?If the government implements a price ceiling of $15 on the price of basic cable service, what will be the quantity of cable service that will prevail in the market? Is there a surplus or a shortage, and if so, how much?With the new government policy, is there a deadweight loss in the market? If so, why is there a deadweight loss and how much is the deadweight loss?Are consumers better off or worse off with this policy? Are producers better off or worse off? Is society on the whole better off or worse off?

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ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The demand and supply functions for basic cable TV in the local market are given as:

QD = 200,000 – 4,000P

QS =20,000 + 2,000P.

Determine the equilibrium price and quantity that will prevail in an unregulated market.
Calculate the consumer surplus, producer surplus, and total surplus in this market. Is this market efficient? Why or why not?
If the government implements a price ceiling of $15 on the price of basic cable service, what will be the quantity of cable service that will prevail in the market? Is there a surplus or a shortage, and if so, how much?
With the new government policy, is there a deadweight loss in the market? If so, why is there a deadweight loss and how much is the deadweight loss?
Are consumers better off or worse off with this policy? Are producers better off or worse off? Is society on the whole better off or worse off?

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