Given the following supply and demand equations, solve the following supply: p=q Demand: p=200-p a) What is the market...

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Economics

Given the following supply and demand equations, solve thefollowing
supply: p=q
Demand: p=200-p
a) What is the market equilibrium price and quantity?
b) What is the Consumer surplus and the producer surplus?
c) The government enacts a price ceiling of $120. What is thenew consumer surplus?
d) Assume now the government enacts a price ceiling of $20. Whatis the new consumer surplus?
e) When the price ceiling is $20, consumer surplus declines,compared to the market equilibrium. Why? (this question givesanswer options)
1. The lower prices do not overcome reduced quantity
2.The lower quantity does compensate for higher prices
3. Both 1 and 2
4. The lower prices create a marginal elasticity of demand
f) What is the deadweight loss from the price ceiling of$20?
g) What is the Producer Surplus under a price ceiling of$20?
Thank-you in advance for the help!!!

Answer & Explanation Solved by verified expert

3.9 Ratings (381 Votes)

a Supply p qDemand p 200 qAt equilibrium q 200 q q q 200 2q 200 q 100p q 100Equilibrium price 100Equilibrium quantity 100 unitsbConsumer Surplus Area below the demand curve but above See Answer

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