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Question - The city council needs to increase its purchases of oil paints for swimming pools repairments. If they do so, there will be an increase in the quantity of oil paints supplied from 8 million to 10 million cubic meters every year. The increase in the oil paints produced will drive the price of oil paints from 5 dollars per cubic meter to 5.5 per cubic meter. And, the elasticity of demand of the oil paints market at the new equilibrium is-0.20(round to two decimal places when calculating )
Required -
1. Calculate what is the change in the producer surplus?
2. What is change in the consumer surplus?
3. What is the change in the social surplus?
4. How to Draw/construct relevant diagram(s)?
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