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The market of alcoholic beverages is characterized by the following linear demand and supply curves:

Qs = 4 + 2P

QD = 10 - P

Suppose the government is evaluating to impose a price floor of 3 over the price of alcoholic beverages.

Explain the effect of this policy in terms of welfare.

How is this welfare change distributed across producers and consumers?

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Mahe Alam
Mahe AlamLv10
28 Sep 2019
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