Question

Plase read the question carefully, the number is different. And please answer each question thank you. Please do not copy another question answers

in a perfectly competitive market, the market demand curve is given by Q = 50 − 2P , and the market supply curve is given by Q = 3P .

a) Find the equilibrium price and quantity demanded.

b) Find the consumer and producer surplus.

c) Determine the net economic benefit.

Now suppose we impose a price ceiling (PC) at P = 6

d) Find the quantity supplied and demanded with PC.

e) Find the consumer and producer surplus with PC assuming the rationing is as efficient as possible.

f) What is the DWL with the efficient rationing?

g) Find the consumer and producer surplus with PC assuming the rationing is as inefficient as possible.

h) What is the DWL with the inefficient rationing?

Answer 1

Market Demand Curve, Q = 50-2 P

Market Supply Curve, Q = 3P

At equilibrium,

Market demand = Market supply

50 -2P = 3 P

Therefore, P = 50/5

P = 10

Q = 3(10) = 30

b) To find the consumer surplus and produce surplus,