Question

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

Answer #1

**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.

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

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