The figure below shows the market of physician visit. Current market price for each physician visit is $4. Price ($) 7 6 5 4 3 Pukr = $4 0 1 2 3 4 5 6 7 Number of Physician Visits (Q) A. According to the figure, what is the optimal number of physician visits which can maximize producer surplus? B. Calculate total producer surplus when the number of physician visits reaches the optimal amount. C. Now that the price for physician visits is regulated and capped at $3 dollars. Use the graph above to show the new market outcome. Briefly explain how this price ceiling affect consumers and producers.

The figure below shows the market of physician visit. Current market price for each physician visit is $4. Price ($) 7 6 5 4 3 Pukr = $4 0 1 2 3 4 5 6 7 Number of Physician Visits (Q) A. According to the figure, what is the optimal number of physician visits which can maximize producer surplus? B. Calculate total producer surplus when the number of physician visits reaches the optimal amount. C. Now that the price for physician visits is regulated and capped at $3 dollars. Use the graph above to show the new market outcome. Briefly explain how this price ceiling affect consumers and producers.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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