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Demand and Supply Price $10 $9 $8 $7 Quantity Demanded Quantity Supplied $8 $5 $4 $3 $2 $1 0 1 23 4 5 6 78 9 10 Quantity a) What are equilibrium price and equilibrium quantity? Calculate consumer surplus. producer surplus and total surplus. Show your work b) If the government imposes price ceiling of $2 in this market, will there be a surplus or shortage? Calculate. Show your calculations. c) Calculate consumer surplus and producer surplus when the price ceiling is in place Show your calculations, show the area of cach surplus and DWL on the graph. d) Assume now, that the government imposes a price floor of $7. Calculate the consumer surplus, producer surplus and deadweight loss. Show your calculations.

Demand and Supply Price $10 $9 $8 $7 Quantity Demanded Quantity Supplied $8 $5 $4 $3 $2 $1 0 1 23 4 5 6 78 9 10 Quantity a) What are equilibrium price and equilibrium quantity? Calculate consumer surplus. producer surplus and total surplus. Show your work b) If the government imposes price ceiling of $2 in this market, will there be a surplus or shortage? Calculate. Show your calculations. c) Calculate consumer surplus and producer surplus when the price ceiling is in place Show your calculations, show the area of cach surplus and DWL on the graph. d) Assume now, that the government imposes a price floor of $7. Calculate the consumer surplus, producer surplus and deadweight loss. Show your calculations.

Principles of Microeconomics (MindTap Course List)
Principles of Microeconomics (MindTap Course List)
8th Edition
ISBN:9781305971493
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter7: Consumers, Producers, And The Efficiency Of Markets
Section: Chapter Questions
Problem 9PA
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The following diagram represents market for a normal good. Demand and Supply Price $10 $9 Quantity Demanded Quantity Supplied $8 $7 $8 $5 $4 $3 $2 $1 $0 0 1 2 3 4 5 6 78 9 10 Quantity a) What are equilibrium price and equilibrium quantity? Calculate consumer surplus, producer surplus and total surplus. Show your work b) If the government imposes price ceiling of $2 in this market, will there be a surplus or shortage? Calculate. Show your calculations. c) Calculate consumer surplus and producer surplus when the price ceiling is in place. Show your calculations, show the area of cach surplus and DWL on the graph. d) Assume now, that the government imposes a price floor of $7. Calculate the consumer surplus, producer surplus and deadweight loss. Show your calculations.
Transcribed Image Text:The following diagram represents market for a normal good. Demand and Supply Price $10 $9 Quantity Demanded Quantity Supplied $8 $7 $8 $5 $4 $3 $2 $1 $0 0 1 2 3 4 5 6 78 9 10 Quantity a) What are equilibrium price and equilibrium quantity? Calculate consumer surplus, producer surplus and total surplus. Show your work b) If the government imposes price ceiling of $2 in this market, will there be a surplus or shortage? Calculate. Show your calculations. c) Calculate consumer surplus and producer surplus when the price ceiling is in place. Show your calculations, show the area of cach surplus and DWL on the graph. d) Assume now, that the government imposes a price floor of $7. Calculate the consumer surplus, producer surplus and deadweight loss. Show your calculations.
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