question archive The market for good B is currently in equilibrium at a quantity of 120 and price of $60
The market for good B is currently in equilibrium at a quantity of 120 and price of $60
Subject:EconomicsPrice: Bought3
The market for good B is currently in equilibrium at a quantity of 120 and price of $60. The price elasticity of supply for good B is 1.5, while the price elasticity of demand for good B is -0.25. The supply and demand equations are both linear.a) What are the equations for supply and demand in the market? Graph them.b) Suppose that the government wants to help consumers by instituting a price ceiling of $40 on widgets. Will this create a shortage or a surplus in the market? how large?c) Calculate the consumer surplus before and after the price ceiling is instituted. Is this policy effective in increasing consumer surplus?
