Question

# 1- Create a hypothetical market (make a table showing values for Supply and Demand) 2- Write...

1- Create a hypothetical market (make a table showing values for Supply and Demand)

2- Write The supply & demand equations showing the slope and intercept.

3- Calculate consumer surplus and producer surplus in this market.

4- Show on two separate graphs the impact of a price floor and a price ceiling on the market. On each graph show the market shortage and market surplus resulted from Price ceiling and Price floor.

plesse show table

a)

 Price Demand Supply 0 100 0 2 90 10 4 80 20 6 70 30 8 60 40 10 50 50 12 40 60 14 30 70 16 20 80 18 10 90 20 0 100

At equilibrium, demand equals supply

100 - 5P = 5P

P = 10

At this Price, Q = 50

b) Demand equation: Q = 100 - 5P

100 is the intercept here and -5 is the slope.

Supply equation: Q = 5P

Slope of supply curve = 5 and intercept is 0.

c)

Producer surplus is area of portion B whose sum is (1/2) * (50 - 0) * (10 - 0) = 250 while consumer surplus is area of portion A whose sum is (1/2) * (50 - 0) * (20 - 10) = 250

d)

Price ceiling at \$5 have supply of goods equal to 75 units while demand of 25 units which creates surplus of 75 - 25 = 50 units.

At price floor of \$15, demand of goods is 75 units while supply is 25 units creating shortage of 75 - 25 = 50 units.

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