ECON 1B03 Lecture Notes - Lecture 7: Deadweight Loss, Economic Equilibrium, Economic Surplus
19 views6 pages
1
Workshop #3 Welfare, Externalities, Public Goods, Price Controls
1. Market demand is given by Q = 300 – P and market supply is given by Q = 4P.
a) What are equilibrium price and quantity? Sketch your results and also solve for and label the
price intercepts for both curves.
b) What is the value of consumer surplus?
c) What is the value of producer surplus?
2
d) The government decides that the equilibrium price is too high. It freezes the price level at P =
$45. Is there a shortage or surplus, and how much?
e) What is the new value of consumer surplus?
f) What is the new value of producer surplus?