Question

A market has supply and demand curves that follow the following set of equations: Supply → P = 4QS + 10 Demand → P = -5QD + 280. For both of these problems pictures are not required but the problems may be much easier if you draw some.

a) Find the equilibrium price and quantity in this market and the consumer and producer surplus from the equilibrium price and quantity. (1 point)

b) If there is a ceiling price in this market of 90, find the new consumer and producer surplus. Use these numbers to find the size of the deadweight loss and explain from these numbers whether or not consumers, as a whole, would be in favor of this ceiling. (2 points)

Answer #1

Consider the market for gasoline in Canada. Suppose the market
demand and supply curves are described by the equations below. In
each case, quantity refers to millions of litres of gasoline per
month; price is per litre (in cents).
Demand: P = 100 – 5QD Supply: P = 44 + 2QS
(a) Plot the demand and supply curves on a scale diagram.
(b) Compute the equilibrium price and quantity.
(c) Suppose government imposes a tax of 20 cents per litre....

Consider a perfectly competitive market in the short-run with
the following demand and supply curves, where P is in dollars per
unit and Q is units per year:
Demand: P = 500 –
0.8Q
Supply: P = 1.2Q
Calculate the short-run competitive market equilibrium price
and quantity. Graph demand, supply, and indicate the equilibrium
price and quantity on the graph.
Now suppose that the government imposes a price ceiling and
sets the price at P = 180. Address each of...

the following demand and supply curves:
QD = 80,000 - 2,000P and QS = -25,000 + 5,000P
3.
What is the consumer surplus in this example of supply and
demand?
What is the producer surplus in this example?
How much are the variable costs to the firm in this example?
4.
Suppose the government were to impose a price ceiling of $10 on
the sale of
each unit sold in this market.
Is there a shortage or a surplus? By...

For the following set of demand and supply, equations do the
following,
Find the equilibrium price and equilibrium quantity for each
set of equations.
Draw each set of equations in a clearly labeled graph and show
the equilibrium P and Q.
Calculate the consumer surplus at the equilibrium P and Q found
in b.
If the price were to increase, calculate the loss in the
consumer surplus. Calculate the total new consumer surplus.
If the price were to decrease, calculate...

Consider the market for butter in
Saudi Arabia. The demand and supply relations are given as
follows:
Demand:
QD = 12 - 2P
Supply:
Qs = 3P - 3.
P is the price of butter.
Calculate:
Equilibrium price _____________
2. Equilibrium quantity _____________
Consumer surplus
___________
4. Producer surplus ___________
Draw the demand and supply graphs. Show the equilibrium price
and quantity, consumer surplus and producer surplus in the graph
below. Graphs must be on scale.
Suppose government imposes...

A person’s demand and supply equations for pork per month are
as follows:
Demand: Q = 25 – 5*P
Supply : Q = -20 + 10*P
Required:
a. What are the market equilibrium price ($/kg) and quantity
(kgs/month) for pork?
b. At the market equilibrium price, what are the consumer
surplus and producer surplus?

Suppose the market for bottled water is competitive and is
characterized by the following demand and supply conditions. The
inverse demand and supply curves are depicted below.
Demand: QD = 400 – 100 P
Supply: QS = 280 + 20 P (for P >
0)
Price:
Quantity:
Consumer surplus:
Producer surplus:
Suppose in anticipation of an approaching hurricane, demand
rises to QD = 800 – 100 P. What will happen in the
market, including welfare effects, as measured by consumer...

Suppose the demand and supply for a product is given by the
following equations:
p=d(q)=−0.8q+150
(Demand)
p=s(q)=5.2q
(Supply)
For both functions, q is the quantity and p is the price.
Find the equilibrium point. (Equilibrium price and equilibrium
quantity) (1.5 Marks)
Compute the consumer surplus. (1.5 Marks)
Compute the producer surplus. (1.5 Marks)

Market demand for calculators is P = 300 – 3Q and market supply
is P = 20 + 2Q. A) Calculate market equilibrium price and quantity.
B) How many calculators will be traded if a $10/unit sales tax is
implemented? C) Does it matter if we impose this tax on suppliers
or consumers? Why? D) At market equilibrium, is demand more or less
elastic than supply? E) Calculate the effects of the tax on
consumer surplus, producer surplus, tax revenue,...

The market for apples is perfectly competitive, with the market
supply curve is given by P = 1/8Q and the market demand curve is
given by P = 40 – 1/2Q.
a. Find the equilibrium price and quantity, and calculate the
resulting consumer surplus and producer surplus. Indicate the
consumer surplus and producer surplus on the demand and supply
diagram.
b. Suppose the government imposes a 10 dollars of sale tax on
the consumer. What will the new market price...

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