Let s count the value of lost gains from trade in a regulated market. The government decides it wants to make basic bicycles more affordable, so it passes a law requiring that all one-speed bicycles sell for $30. well below the market price.
Use the following data to calculate the lost gains from trade, just as in Figure 8.3. Supply and demand are straight lines.
![596_Supply & Demand.jpg](https://secure.tutorsglobe.com/CMSImages/596_Supply & Demand.jpg)
What is the total value of wasted time in the price-controlled market?
What is the value of the lost saints from trade?
Note that we haven't given you the original market price of simple bicycles-why don't you need to know it?