--%>
Assignment Help - homework help

Equilibrium market price

In a perfectly competitive market, market demand curve is provided by Qd = 200 − 5Pd, and the market supply curve is provided by Qd = 35Ps.

a) Determine the equilibrium market price and quantity demanded and supplied in the lack of price controls.

b) Assume that a price ceiling of $2 per unit is imposed. Determine the quantity supplied with a price ceiling of this scale? Determine the size of the shortage made by the price ceiling?

c) Determine the consumer surplus and producer surplus in the lack of price ceiling. Determine the total economic benefit in the lack of price ceiling?

d) Determine the consumer surplus and producer surplus beneath price ceiling. Suppose that rationing of limited good is as proficient as possible. Determine the total economic benefit in this condition? Does the price ceiling outcome in a deadweight loss? If so, how much is it?

E

Expert

Verified

a) Pd = Ps = $5; Qd = Qs = 175 units.

b) Qs= 70 units.

c) The surplus implications of a price ceiling are illustrated below.

2384_1.jpg

1380_2.jpg

   Related Questions in Microeconomics

  • Q : Problem regarding marginal factor cost

    In equilibrium for any of profit-maximizing firm, marginal revenue product of the labor: (i) Is equivalent to the change in net revenue related with selling an extra unit of output. (ii) Surpasses the wage rate by maximum possible. (iii) Equivalents marginal factor co

    		•
  • Q : Pure competition in modern U.S. economy

    Within the modern U.S. economy, there pure competition is: (w) characteristic of all resource markets. (x) rare in product markets. (y) most common for public utilities. (z) strictly regulated throguh government. I

    		•
  • Q : Monopolies over brand name products of

    Several firms have monopolies over brand name products, although face competition from: (w) international cartels. (x) oligopolistic rivals. (y) producers of close substitutes for their products. (z) intra-firm rivalry.

    Q : Problem on equal marginal utilities per

    Substitution takes place when prices change and hence demand curves are negatively-sloped since of the behavior of consumers which most directly underpins the law of: (1) Equivalent marginal utilities per dollar. (2) Diminishing net utility. (3) The income effect. (4)

    		•
  • Q : Purely competitive firms in long-run

    Purely competitive firms in long-run equilibrium as: (w) should use the most efficient technology available. (x) follow cut throat policies to produce more than society demands. (y) produce output levels where TC = TR = MR = MC = P = AR = AC. (z) have

    		•
  • Q : Generate entry and exit long-run

    Purely competitive firms regulate to the optimum size within the long run since: (w) managers are more interested in efficiency than profit. (x) entrepreneurs want to do what is good for society. (y) entry and exit generate long-run equilibrium where

    		•
  • Q : Expectations of short run effect Most

    Most of the consumers and investors have learned via experience that ‘new’ high-tech equipment becomes outdated quickly, and that prices drop by roughly half annually. They adjust by delaying purchases, waiting for estimated higher quality and lower prices

    		•
  • Q : Function of money in economy State the

    State the main function of money in economy? Answer: The major function of money in an economic system is to ease the exchange of services and goods.

    		•
  • Q : Problem on production costs I have a

    I have a problem in economics on Problem on production costs. Please help me in the following question. From the viewpoint of sellers, the market demand for the good mainly based least on: (i) Consumer preferences and tastes. (ii) Income and its distr

    		•
  • Q : Demand and supply influences

    Changes in both demand and supply of a commodity might or might not influence its equilibrium price. Describe.

    		•