Determine the cost to the government of buying firms unsold, Managerial Economics

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Determine the cost to the government of buying firms unsold

Consider a market where supply and demand are given by Q_X^S = -14 + P_X and Q_X^d= 76 - 2P_X. Suppose the government imposes a price floor of $35, and agrees to purchase and discard any and all units consumers do not buy at the floor price of $35 per unit.

a. Determine the cost to the government of buying firms' unsold units.

b. Compute the lost social welfare (deadweight loss) that stems from the $35 price floor.

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Managerial Economics: Determine the cost to the government of buying firms unsold

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Managerial Economics: Determine the cost to the government of buying firms unsold

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