Competitive Market Policies

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?

P*= Q*=

2) What are consumer, producer, and total surplus in the competitive equilbrium?

CS= PS= TS=

3) What are the elasticities of supply and demand at the competitive equilibrium?

ES= ED=

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?

Q* = CS= PS= DWL=

6) Consider a price ceiling of 50. What is the equilibrium market quantity, consumer and producer surplus, and dead weight loss?

Q* = CS= PS= DWL=

7) Consider a production quota of 10. What is the equilibrium market price, consumer and producer surplus, and dead weight loss?

P* = CS= PS= DWL=

Score = 0