INT: Sketch the supply and demand equations. e to good weather, there is an increase in the demand for the good. The new demand equation is Qd = 190 - cide between two options: Maintain the number of quotas and let the market adjust, or Maintain the price support and increase the number of quotas. ppose that the government decides to maintain the number of quotas and let the market adjust. Calculate the Calculate price observed in the market, (1) price observed in the market (ii)Consumer surplus ()Producer surplus (iuDeadweight lorr NT: Sketch the supply and demand equations,
INT: Sketch the supply and demand equations. e to good weather, there is an increase in the demand for the good. The new demand equation is Qd = 190 - cide between two options: Maintain the number of quotas and let the market adjust, or Maintain the price support and increase the number of quotas. ppose that the government decides to maintain the number of quotas and let the market adjust. Calculate the Calculate price observed in the market, (1) price observed in the market (ii)Consumer surplus ()Producer surplus (iuDeadweight lorr NT: Sketch the supply and demand equations,
Chapter14: Monopoly
Section: Chapter Questions
Problem 14.10P
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Transcribed Image Text:Question 6
A market has a demand function given by the equation Qd = 180 – 2P, and a supply function given by the equation Qs = -15 + P. The market is
government-regulated with a price support per unit and production quotas. (NOTE: A production quota is a restriction on the quantity of
the good that can be produced. Firms are not allowed to produce more than the quota)
(a) If the price is set at $72 per unit, what production quota is needed to make sure there are no shortages or surpluses?
HINT: Sketch the supply and demand equations.
Due to good weather, there is an increase in the demand for the good. The new demand equation is Qd = 190 – 2P. The government is trying to
decide between two options:
Maintain the number of quotas and let the market adjust, or
Maintain the price support and increase the number of quotas.
Suppose that the government decides to maintain the number of quotas and let the market adjust.
(c) Calculate the
Calculate
) price observed in the market,
(i) price observed in the market
(ii)Consumer surplus
(ii) Producer surplus
(iv)Deadweight loss
HINT: Sketch the supply and demand equations.
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