2. In Application Question 5 of Chapter 3, we examined the market for DVDs where the supply and demand curves are given by Q = 3P and Q = 60-2P, respectively. Refer to the following diagram. $ 30 S Price 12 D 0 36 Quantity 60 (a) If the government imposes a price ceiling of $5 in this market, what will happen to the positions of the demand and supply curves? (b) Calculate the consumer surplus at the equilibrium price. (c) Calculate the producer surplus at the equilibrium price. Now suppose that a $6 per unit maximum price is imposed in this market. The diagram shows the impact on quantity demanded and quantity supplied. (d) Calculate the consumer surplus. (Careful!) (e) Calculate the producer surplus. (f) Calculate the deadweight loss.

2. In Application Question 5 of Chapter 3, we examined the market for DVDs where the supply and demand curves are given by Q = 3P and Q = 60-2P, respectively. Refer to the following diagram. $ 30 S Price 12 D 0 36 Quantity 60 (a) If the government imposes a price ceiling of $5 in this market, what will happen to the positions of the demand and supply curves? (b) Calculate the consumer surplus at the equilibrium price. (c) Calculate the producer surplus at the equilibrium price. Now suppose that a $6 per unit maximum price is imposed in this market. The diagram shows the impact on quantity demanded and quantity supplied. (d) Calculate the consumer surplus. (Careful!) (e) Calculate the producer surplus. (f) Calculate the deadweight loss.

Microeconomics: Principles & Policy

14th Edition

ISBN:9781337794992

Author:William J. Baumol, Alan S. Blinder, John L. Solow

Publisher:William J. Baumol, Alan S. Blinder, John L. Solow

Chapter4: Supply And Demand: An Initial Look

Section: Chapter Questions

Problem 3TY

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