Calculate magnitude of deadweight loss from price celling

Assignment Help Business Economics

Reference no: EM13986793

Suppose the government imposes a price ceiling of $50 on a market characterized by the following information:

Qd = 700 - 2P Qs = 100 + 4P

[Note: P = price per unit; Qd = hundreds of units demanded; Qs = hundreds of units supplied]

Calculate the magnitude of deadweight loss from the price ceiling. Find a price floor that will result in the same magnitude of deadweight loss.

Reference no: EM13986793

Questions Cloud

Expansionary fiscal policy by lowering taxes : Suppose that the government pursues expansionary fiscal policy by lowering taxes. What are the expected demand-side effects? What are the possible offsets to the demand-side effect? How might supply-side effects change these results?

What are the two components of consumption spending : According to the Keynesian model, what are the two components of consumption spending? What factors determine how consumption changes when real disposable income changes? Explain.

Source of competitive advantage are align and differentiate : Three tests for any source of competitive advantage are align, differentiate, and add value. Discuss whether these tests are difficult to pass. Can compensation really be a source of competitive advantage? Why or why not??

Calculate the tax revenue in the post-tax equilibrium : Suppose the market for cigarettes is characterized by the following information: Qd=70–5P [Demand] Qs=3P–10 [Supply]. Calculate the magnitude of the consumer surplus and producer surplus in the pre-tax equilibrium. Calculate the tax revenue in the po..

Calculate magnitude of deadweight loss from price celling : Suppose the government imposes a price ceiling of $50 on a market characterized by the following information: Calculate the magnitude of deadweight loss from the price ceiling. Find a price floor that will result in the same magnitude of deadweight l..

Ignoring downsizing from automating : The Baldwin's workforce complement will grow by 20% (rounded to the nearest person) next year. Ignoring downsizing from automating, what would their total recruiting cost be? Assume Baldwin spends the same amount extra above the $1,000 recruiting bas..

Use marginal analysis to make a business decision : Assuming you are the chief executive officer (CEO) of wal mart , describe a situation in which you would use marginal analysis to make a business decision. In creating your response, consider the following questions: What type of business decision w..

Definition of representative and constitutional democracy : A brief working definition of representative democracy, constitutional democracy, and republic forms of government. Then, explain how these concepts impact contemporary democratic governance. Provide specific examples to illustrate your points.

Economies of scale throughout the range of market demand : Economies of scale throughout the range of market demand give natural monopolies

User Account

All Pages