Change in consumer surplus as result of the price ceiling

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Reference no: EM131244600

Consider the global market for crude oil Suppose there exists a single crude oil producer. This producer has a supply function for crude oil given by:

P=0.25Q.

World demand for crude oil is given by:

P=150-0.5Q.

Suppose a global government imposes a price ceiling on the market requiring the price for oil to be less than $40/barrel.

i) If the crude oil producer acts as price-taking firm, what is the change in consumer surplus as a result of the price ceiling?

Reference no: EM131244600

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