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Question -
The demand for DVDs is P = 60 - 0.05Q and the supply is P = 0.025Q. For each of the following scenarios calculate:
i) price paid by buyers,
ii) price received by sellers,
iii) quantity supplied,
iv) quantity demanded,
v) quantity traded,
vi) consumer surplus,
vii) producer surplus,
viii) tax revenue,
ix) deadweight loss.
Include a detailed and well-labeled graph with each scenario. Also include a list of which group(s) (either Consumers, Producers, or Government) are most likely to benefit in each scenario.
Scenario A: An unregulated market (no price ceilings, price floors, subsidies, or taxes)
Scenario B: A market with a price ceiling of $15.
Scenario C: A market with a price floor of 530.
Scenario D: A market with a $15 per unit tax.
Compute the equilibrium tax rate and the equilibrium levels of consumption, the trade balance, private savings, the primary and secondary is deficits, and the current account in periods 1 and 2
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