A perfectly competitive market is characterized by the following inverse demand function and inverse supply function where Q is output and P is the price in dollars. Demand: P = 100 – QD Supply: P = 10 + QS Suppose that a price ceiling of $30 is set by the government. Calculate the consumer surplus, the producer surplus, and the deadweight loss as a result of the government price ceiling

A perfectly competitive market is characterized by the following inverse demand function and inverse supply function where Q is output and P is the price in dollars. Demand: P = 100 – QD Supply: P = 10 + QS Suppose that a price ceiling of $30 is set by the government. Calculate the consumer surplus, the producer surplus, and the deadweight loss as a result of the government price ceiling

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter29: Resource Markets

Section: Chapter Questions

Problem 15E

See similar textbooks

Similar questions

A perfectly competitive market is characterized by the following inverse demand function and inverse supply function where Q is output and P is the price in dollars. Demand: P = 100 – QD Supply: P = 10 + QS Suppose that a price ceiling of $30 is set by the government. Calculate the consumer surplus, the producer surplus, and the deadweight loss as a result of the government price ceiling
A perfectly competitive market is characterized by the following inverse demand function and inverse supply function where Q is output and P is the price in dollars. 1. Suppose that a price ceiling of $30 is set by the government. Calculate the consumer surplus, the producer surplus, and the deadweight loss as a result of the government price ceiling
In a perfectly competitive market for cheese with downward sloping demand and upward sloping supply, the equilibrium price is $12 per kilo. If the government imposes a price ceiling of $10, we can conclude that the government policy will: Select one: a. reduce the number of units sold only if demand is elastic b. decrease producer surplus and decrease total surplus c. reduce the number of units sold only if demand is inelastic d. decrease producer surplus but increase total surplus e. increase producer surplus but decrease total surplus
In the free-market equilibrium of a perfectly competitive market, the price of the good is 90 dollars and the elasticity of demand and the elasticity of supply values are respectively Ed* = -6.6 and Es* = 4.1 Suppose the government imposes a per-unit tax equal to 10.4 payable by consumers. Calculate the estimate of the price firms charge consumers in the tax equilibrium using the elasticity values provided above. Then enter that price value below.
Consider the perfectly competitive market for an agricultural commodity. The direct market demand curve is Q(P) = 720 − 15P and the direct market supply curve is Q (P) = 15P. The market equilibrium quantity is 360 units at a price of $24. Suppose the government imposes a price floor at P = $36.00 and uses a deficiency payment program to implement the floor. What quantity will be sold and what prices will consumers and producers face under this policy? The new equilibrium quantity is 540 units. Consumers pay $12 and the producers receive $36. Find the: a. Change in consumer surplus and producer surplus. b. Government Expenditure. c. Change in social surplus.
The market for N-95 masks is perfectly competitive. Market Demand is given by Q=308-2P and Market Supply is given by Q-2P. The government imposes a price ceiling of $63. What is the minimum Deadweight Loss, in absolute terms because of the price ceiling? Enter a number only, drop the $ sign.
The market for N-95 masks is perfectly competitive. Market Demand is given by Q=447-2P and Market Supply is given by Q-3P. The government imposes a price floor of $37. What is market price with this price floor?
Suppose that the demand for a good is described by the inverse demand function p = 10 - 3q and the supply of the good is given by the inverse supply function p = 2 + 2 q: Q: Suppose the government imposes a $1 per unit tax on suppliers. Now what is the price the seller will receive and quantity of the good in this market?
The market for N-95 masks is perfectly competitive. Market Demand is given by Q=398-2P and Market Supply is given by Q=3P. The government imposes a price floor of $133. What is the quantity traded in the market with this price floor?
Market demand for Mandrake roots is given by Q=305-2P and marketsupply is given by Q=5P. The market is initially in equilibrium.The government imposes a price ceiling of $9. What is the CHANGE in Producer Surplus due to the price ceiling?Assume competitive markets.
Suppose the inverse market demand function is p(q) = 10 + 125/q, p, q ≥ 1 and the market supply function is q(p) = 4p, p, q ≥ 1. (a) Graph the market demand and supply functions as accurately as possible. (b) Find the equilibrium price and quantity. (c) Show that the demand is elastic. (d) Find the value of MR = d(pq)/dq. (e) If there is a quantity tax of t = $2.5/unit, show how much of the tax burden that will be passed to the consumer.
Consider the perfectly competitive market for an agricultural commodity. The direct market demand curve is Q(P) = 780 − 15P and the direct market supply curve is Q (P) = 15P. The market equilibrium quantity is 390 units at a price of $26. Suppose the government imposes a price support at P = $39.00 and uses a deficiency payment program to implement the floor. What quantity will be sold and what prices will consumers and producers face under this policy? The new quantity demanded is 195 units and the quantity supplied is 585 units. Find the welfare impact for the following: a. Change in consumer surplus and producer surplus. b. Government Expenditure. c. Change in social surplus.