vetica 12 11 10 CS. 9 18 7 6 5 14 3 2 1 B ZU A-A- LASJI VNR → Price Controls and Efficiency Supply Terat 5 10 15 20 25 30 35 40 45 50 55 60 and total surplus is O Calculate the consumer, producer and total surplus in question 1. 1. In equilibrium, consumer surplus is Suppose the government places an $8 price floor on this good. 2. After the price floor, what is consumer surplus? Shade this area in the graph and label producer surplus is L 3. After the price floor, what is producer surplus? Shade this area in the graph and label PS. 4. After the price floor, what is total surplus? Shade this area in the graph and label TS. 5. What is the deadweight loss resulting from the $8 price floor? Indicate this area in the graph by shading it. +4
vetica 12 11 10 CS. 9 18 7 6 5 14 3 2 1 B ZU A-A- LASJI VNR → Price Controls and Efficiency Supply Terat 5 10 15 20 25 30 35 40 45 50 55 60 and total surplus is O Calculate the consumer, producer and total surplus in question 1. 1. In equilibrium, consumer surplus is Suppose the government places an $8 price floor on this good. 2. After the price floor, what is consumer surplus? Shade this area in the graph and label producer surplus is L 3. After the price floor, what is producer surplus? Shade this area in the graph and label PS. 4. After the price floor, what is total surplus? Shade this area in the graph and label TS. 5. What is the deadweight loss resulting from the $8 price floor? Indicate this area in the graph by shading it. +4
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
Transcribed Image Text:Ivetica
CS
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F
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BIU
Price Controls and Efficiency
Supply
and total surplus is
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Calculate the
consumer, producer
and total surplus in
question 1.
Suppose the government places an $8 price floor on this good.
2. After the price floor, what is consumer surplus? Shade this area in the graph and label
11 In equilibrium,
consumer surplus is
3. After the price floor, what is producer surplus? Shade this area in the graph and label PS.
4. After the price floor, what is total surplus? Shade this area in the graph and label TS.
5.
What is the deadweight loss resulting from the $8 price floor? Indicate this area in the
graph by shading it.
producer surplus is
6
UP
||
Expert Solution
Step 1: Define price floor
Price floor is minimum price that sellers can recieve by selling their good in market or to government. Usually,price floor is set above equilibrium price.
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