Reference no: EM13979164
In the competitive market for welding services in Tucson, assume the demand is
D(P) = 34-P/2 and the supply is S(P) = 5×(P-2). For each situation (a)-(d), calculate: (i) the quantity traded;
(ii) the surplus generated by that trade; (iii) the division of that surplus between buyers’ and sellers’ surplus;
(iv) whether the outcome is efficient, based on the information provided, and if not then which kind of inefficiency is occurring (input, output, or exchange). You should always assume that the consumers who buy are those willing to pay the most, and the firms who sell are those having the lowest costs.
(a) The market is in equilibrium.
(b) The market price is 4.
(c) The market price is 10.
(d) The market price is 10, but in this case you should assume that a law forces buyers in the market to purchase the full quantity supplied, even if they would prefer to buy less.
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: In the competitive market for welding services in Tucson, assume the demand is. calculate: (i) the quantity traded; (ii) the surplus generated by that trade; (iii) the division of that surplus between buyers’ and sellers’ surplus;
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