MGEC38H3 Study Guide - Midterm Guide: Canadian Airlines, Coffee Bean, Competitive Equilibrium

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Change in cs: (2 pts 1 pt for correct answer, 1 pt for showing work) Pc = (2400 2130)/10 = (1 pt) Q* = 50 + 40(52) = 2130 (1 pt) In cs = 0. 5( )(2130 + 1930) = . Change in ps: (2 pts 1 pt for correct answer, 1 pt for showing work) In ps = 0. 5( )(2130 + 1930) = . Change in ts: (2 pts 1 pt for correct answer, 1 pt for showing work) In ts = in cs + in ps cost of deficiency payment. In ts = + (2130) = (= dwl) or, in ts = 0. 5( )(2130 1930) = . * note: price is in terms of per kg and quantity measures thousand kg. Coffee bean farmers (1 pt): they receive higher price per kg sold & their income increases (2 pts). Coffee bean consumers (1 pt): the actual price paid per kg falls (2 pts).

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