Question 1
Consider a competitive market with supply of P = 40 + 0.1QS and demand of P = 140 - 0.4QD. Round answers to one decimal place.
1) What is the competitive equilibrium market price and quantity?
2) What are consumer, producer, and total surplus in the competitive equilbrium?
3) What are the elasticities of supply and demand at the competitive equilibrium?
4) Using the answers in 3), who would pay the greater burden of a tax?
5) Consider a price floor of 80. What is the equilibrium market quantity, consumer and producer surplus, and dead weight loss?
6) Consider a price ceiling of 50. What is the equilibrium market quantity, consumer and producer surplus, and dead weight loss?
7) Consider a production quota of 10. What is the equilibrium market price, consumer and producer surplus, and dead weight loss?
Score = 0