Question

the
inverse supply is p=.2Q-20 and inverse demand is P=40-.2Q. there is
a price floor of $12, what is the producer and consumer
surplus

Answer #1

Equating, the invese supply and demand we have

.2Q-20 =40-0.2Q

0.4Q=60

Q=60/0.4 = 150

P=0.2*150-20 = 10

The total surplus is (demand intercept-supply intercept)*quantity*0.5=(40+20)*150*0.5 = 4500

Since the price floor is 12>10, it is binding.

Now, the Quantity sold= quantity demanded

12=40-.2Q

Q=28*5 = 140

For a supply of 140, the price should be .2*140-20=8

The consumer surplus is (demand intercept-price)*quantity*0.5 = (40-12)*140*0.5 = 1960 (Ans)

The deadweight loss is 0.5*(change in quantity)*(Difference in price for supplier and demand for the same amount of quantity) = 0.5*(150-140)*(12-8) = 20

Thus, the producer surplus is Equilibrium Surplus - CS - DWL = 4500-1960-20 = 2520 (Ans)

The inverse Demand is given by: P=40-0.2Q and the inverse supply
is given by: P=0.2Q-20. If a price ceiling of $6 is imposed, then
Producer surplus and DWL
are: (Hint: it helps to draw a graph for this
question).

Suppose a perfectly competitive market has the following inverse
supply and demand curves: Supply: P= 5+2Q Demand: P = 50-Q.
1) Solve for the perfectly competitive Pe and Qe, and calculate
consumer+producer surplus at Pe, Qe.

1. Inverse demand is P = 245 – 2Q and inverse supply is P = 20 +
Q. a. What is the equilibrium price and quantity in this market? b.
Graph the supply and demand curves, correctly identifying the
intercepts and equilibrium. c. Is the equilibrium quantity in the
elastic, unit elastic, or inelastic portion of the demand curve?
Explain. d. Suppose inverse supply changes to P = 10 + 0.5Q. Is
this an increase or decrease in supply? Graph...

A monopolist faces inverse demand p = 40 − 2q and has a marginal
cost of 20.
(a) [20 points] What output will the monopolist produce?
(b) [10 points] What are consumer surplus, monopoly profits, and
deadweight loss?
(c) [10 points] Suppose the monopolist’s costs rise to 90. What
are consumer surplus, monopoly profits, and deadweight loss
now?
Please help to explain part (c).

1. Suppose a monopolist faces an inverse demand function of P =
150 ? 2Q. The firm’s cost functions is 30Q.
(a) What is the firm’s marginal cost? Average cost? How about
the firm’s marginal revenue?
(b) What would the firm charge if they were a single price
monopolist?
(c) What is the consumer surplus, producer surplus, and dead
weight loss.
(d) Suppose the monopolist is able to perfectly price
descriminate, what are the consumer surplus, producer surplus, and
dead...

The demand for milk is
P = 150 - 2Q
the supply curve is
P = 4Q.
What is the level of consumer surplus at the equilibrium price
and quantity?

The inverse Demand is given by: P=30-0.25Q and the inverse
supply is given by: P=0.5Q-30. If a Price Floor of $12 is imposed,
then Consumer Surplus and DWL
are: (Hint: it helps to draw a graph for this question)
Select one:
a. CS=1728; DWL = 12
b. CS=648; DWL = 12
c. CS=1600; DWL = 6
d. CS=648; DWL = 24
e. None of the above

Suppose the world price for a good
is 40 and the domestic demand-and-supply curves are given by the
following equations:
Demand: P = 80 – 2Q
Supply: P = 5 + 3Q
a. How much is
consumed?
b. How much is produced
at home?
c. What are the values
of consumer and producer surplus?
d. If a tariff of 10
percent is imposed, by how much do consumption and
domestic production change?
e. What is the change in
consumer and...

Suppose the inverse demand equation for taxi is P = 100 − 2Q and
the inverse supply equation is P = 2Q. Suppose there’s a policy
that restricts the price to be at least $65. Which of the following
statements is correct?
A. The market equilibrium price will be 70.
B. There will be no excess demand or excess supply.
C. There will be an excess demand of 15 units.
D. There will be an excess supply of 15 units....

A monopoly is facing inverse demand given by P = 40−0.5Q and
marginal cost given by MC = 7+0.1Q. Illustrate these on the graph
and answer the questions below.
(a) If the monopolist is unable to price discriminate, what is
the profit-maximizing quantity? What is the price? What is consumer
surplus? Producer surplus? Deadweight loss?
(b) Suppose instead the monopolist is able to perfectly price
discriminate. How many units will be sold? What is consumer
surplus? Producer surplus? Deadweight loss?

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 2 hours ago

asked 2 hours ago

asked 2 hours ago

asked 2 hours ago

asked 2 hours ago

asked 3 hours ago

asked 3 hours ago