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Assume the market for fruit from a local fruit stand has the supply and demand curves given below.
P = 0.9 - 0.08Q P = 0.1 + 0.02Q
Where P is in dollars and Q is in hundreds of pounds.
Use the information given to graph the market for fruit and indicate each of the following on your graph:
a) Find equilibrium price and quantity in the market
b) Calculate consumer surplus at equilibrium
c) Calculate producer surplus at equilibrium
d) Determine total economic surplus
e) Calculate the loss in total economic surplus if a price ceiling is imposed on the market at a price of $0.20
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