1. Suppose the demand and supply curves for a large specialty pizza are given by: Qd = 400-20P Qs = -50 +10P. a) Using the demand and supply functions above, the equilibrium price of a pizza is, and the equilibrium quantity is __. Illustrate your answer. b) Compute CS and PS and illustrate on a graph. c) Suppose that the government decrees that a specialty pizza cannot be sold above $12. As a result of the decree, CS will increase/decrease by ; PS will increase/decrease by Show computations. DWL will equal _. Show all computation below.

1. Suppose the demand and supply curves for a large specialty pizza are given by: Qd = 400-20P Qs = -50 +10P. a) Using the demand and supply functions above, the equilibrium price of a pizza is, and the equilibrium quantity is __. Illustrate your answer. b) Compute CS and PS and illustrate on a graph. c) Suppose that the government decrees that a specialty pizza cannot be sold above $12. As a result of the decree, CS will increase/decrease by ; PS will increase/decrease by Show computations. DWL will equal _. Show all computation below.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter13: General Equilibrium And Welfare

Section: Chapter Questions

Problem 13.1P

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