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In a competitive market, the market demand curve is Q = 28-2p and the market supply curve is Qs = -8 + 2p. Use a spreadsheet to answer the following questions.
a. Determine the quantity demanded and quantity supplied for p = $4, 5, 6, 14. Determine the equilibrium quantity and price.
b. For prices p = $4, 5, 6, 14, determine the consumer surplus. How does an increase in price affect the consumer surplus?
c. For prices p = $4, 5, 6, 14, determine the producer surplus. How does an increase in price affect the producer surplus?
d. Suppose the government limits the quantity traded in the market to 6 units. Calculate the resulting deadweight loss.
Which of the following statements is TRUE if there is a decrease in the demand for iPhones?
a. There is an increase in consumer surplus.
b. There is a decrease in producer surplus.
c. There is an increase in producer surplus.
d. There is an increase in total surplus.
Use the diagram to answer the following questions from (a-c).
a)At the initial equilibrium price, which area represents consumer surplus? Which area represents the producer surplus?
b)After the price ceiling is imposed, which area represents consumer surplus? Which area represents the producer surplus?
c)Which area represents the deadweight loss cost of the price ceiling?