The government has set milk prices artificially high at p+ (price/unit). Sketch a graph of a supply curve S(g) and a demand curve D(q). Label the equilibrium price and quantity p* and q*, respectively. Then label a price p+ that is greater than p*. Let qt be the quantity for which the demand curve passes through pt. A. On your graph, highlight the area corresponding to the consumer surplus when the price is p+. This area can be expressed as 0 B. On your graph, highlight the area corresponding to the producer surplus when the price is p+. This area can be expressed as C. The total gains from trade are given by the sum (consumer surplus + producer surplus). How do the total gains from trade change when the price is changed from p* to p+?
The government has set milk prices artificially high at p+ (price/unit). Sketch a graph of a supply curve S(g) and a demand curve D(q). Label the equilibrium price and quantity p* and q*, respectively. Then label a price p+ that is greater than p*. Let qt be the quantity for which the demand curve passes through pt. A. On your graph, highlight the area corresponding to the consumer surplus when the price is p+. This area can be expressed as 0 B. On your graph, highlight the area corresponding to the producer surplus when the price is p+. This area can be expressed as C. The total gains from trade are given by the sum (consumer surplus + producer surplus). How do the total gains from trade change when the price is changed from p* to p+?
Advanced Engineering Mathematics
10th Edition
ISBN:9780470458365
Author:Erwin Kreyszig
Publisher:Erwin Kreyszig
Chapter2: Second-order Linear Odes
Section: Chapter Questions
Problem 1RQ
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Transcribed Image Text:The government has set milk prices artificially high at p+ (price/unit). Sketch a graph of a supply curve S(g) and
a demand curve D(g). Label the equilibrium price and quantity p* and q*, respectively. Then label a price p+
that is greater than p*. Let qt be the quantity for which the demand curve passes through pt.
A. On your graph, highlight the area corresponding to the consumer surplus when the price is pt. This area can
be expressed as
$0
B. On your graph, highlight the area corresponding to the producer surplus when the price is p+. This area can
be expressed as
C. The total gains from trade are given by the sum (consumer surplus + producer surplus). How do the total
gains from trade change when the price is changed from p* to p+?
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