Question

Consider a perfectly competitive market in the short-run with the following demand and supply curves, where...

  1. 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

  1. Calculate the short-run competitive market equilibrium price and quantity. Graph demand, supply, and indicate the equilibrium price and quantity on the graph.

  1. Now suppose that the government imposes a price ceiling and sets the price at P = 180. Address each of the following questions:
  • Draw the price ceiling line on your graph above.  
  • At P = 180, what is the excess demand (quantity demanded minus the quantity supplied)? Label the quantity demand and quantity supplied at P = 180 on your graph above.
  • What is the deadweight loss (DWL) to consumers from the price ceiling? Show your calculations and label or shade the area of DWL in your graph above.

Homework Answers

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
The corn market is perfectly competitive, and the market supply and demand curves are given by...
The corn market is perfectly competitive, and the market supply and demand curves are given by the following equation: Qd =50,000,000 – 2,000,000 p Qs = 10,000,000 +5,500,000 p Where Qd and Qs are quantity demanded and quantity supplied measured in bushels, and P= price per bushel. 1) Determine consumer surplus at the equilibrium price and quantity.
A market is described by the following supply and demand curves: QSQS =  = 3P3P QDQD =  =...
A market is described by the following supply and demand curves: QSQS =  = 3P3P QDQD =  = 400−P400−P The equilibrium price is______ and the equilibrium quantity is_______ . Suppose the government imposes a price ceiling of $80. This price ceiling is (binding or not binding) , and the market price will be . The quantity supplied will be______ , and the quantity demanded will be_____ . Therefore, a price ceiling of $80 will result in (a shortage, neither a shortage nor...
A market is described by the following supply and demand curves: QS = 2P QD =...
A market is described by the following supply and demand curves: QS = 2P QD = 400 - 3P Solve for the equilibrium price and quantity. If the government imposes a price ceiling of $70, does a shortage or surplus (or neither) develop? What are the price, quantity supplied, quantity demanded, and size of the shortage or surplus? If the government imposes a price floor of $70, does a shortage or surplus (or neither) develop? What are the price, quantity...
Consider a perfectly competitive market in which the market demand curve is given by Qd =...
Consider a perfectly competitive market in which the market demand curve is given by Qd = 10 – 2Pd, and the market supply curve is given by QS = 2PS. a. ) Find the equilibrium price and quantity in the absence of government intervention. Graph it. B.) Suppose the government imposes a price ceiling of $3 per unit. How much is supplied? C.) Suppose, as an alternative, the government imposes a production quota limiting the quantity supplied to six units....
Assume the market is competitive and the supply slopes up and the demand curves slopes down...
Assume the market is competitive and the supply slopes up and the demand curves slopes down are (neither is entirely horizontal or vertical). Answer true/false/uncertain and explain: removing a binding price ceiling would increase quantity supplied, decrease quantity demanded and increase the price demander’s pay.
Suppose in Diamond Land people mine diamonds, and you have a demand and supply curve for...
Suppose in Diamond Land people mine diamonds, and you have a demand and supply curve for diamonds, where P is the price of diamonds and Q is the quantity demanded for diamonds (in pounds): P=300-0.5Q P=100+0.5Q Please find the equilibrium price and quantity for diamonds. Please graph supply and demand curves and show the equilibrium price and quantity demanded on the graph. Please also label the axes, intercepts, and curves. Suppose the government of Diamond Land wants to implement price...
3. Consider a competitive market with the following demand and supply curves: ?? = 600−100?, ??...
3. Consider a competitive market with the following demand and supply curves: ?? = 600−100?, ?? = −150+150? b. If government imposes a price of P5.00, is this a price ceiling or price floor? Will there be a shortage or surplus? If so, by how much will the shortage or surplus be?
Assume the market can be described by the following supply and demand curves. Qs=2p Qd=300-p A....
Assume the market can be described by the following supply and demand curves. Qs=2p Qd=300-p A. Solve for the equilibrium price and equilibrium quantity. Sketch this market. B. Solve for the consumer surplus and producer surplus in this market. C. If the government imposes a price ceiling of $90, does a shortage or surplus (or neither) develop? What are the price, quantity supplied, quantity demanded, and the size of the shortage or surplus (if one exists and the answers differ...
Consider a perfectly competitive market for rental housing. The monthly (inverse) demand and supply functions for...
Consider a perfectly competitive market for rental housing. The monthly (inverse) demand and supply functions for rental units are given by P = 70 – 0.7QD & P = 10 + 0.3QS, where P is monthly rent, and Q is the number of rental units. Note: Each numerical value MUST be rounded to ones. ex) 34.3 --> 34 or 1.5 --> 2 Part a) Using the given inverse functions above, compute the equilibrium price and quantity. Q* = P* =...
A market has supply and demand curves that follow the following set of equations: Supply →...
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...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT