Consider a competitive market characterized

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Consider a competitive market characterized by the following supply and demand formulas: Demand: P = 105 - 0.25QD Supply: P = 0.275QS (a) Show the supply and demand curves and the equilibrium price and quantity in this market in a diagram. (b) With the aid of a diagram, carefully explain what would happen in this market if the government were to impose a price floor of $80 per unit in this market. As part of your answer calculate the size of the deadweight loss associated with this price control. (c) With the aid of a diagram, carefully explain what would happen in this market if the government were to impose a price ceiling of $30 per unit in this market. As part of your answer calculate the size of the deadweight loss associated with this price control.

Reference no: EM131005175

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