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How much is the consumer surplus and the producer surplus

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Reference no: EM13303339

Question 2

Show all working and draw graphs indicating Consumer surplus, producer surplus and dead weight loss as required. 

Suppose the demand curve is p = 80 − x and the supply curve is p = 4x.

1. What is the market equilibrium price and quantity?

2. How much is the consumer surplus and the producer surplus?

CS =______ and PS =_______

3. Suppose the government manipulates the price and fixes it to $90. How much is the dead weight loss?

DWL = ________

4. Instead of the price manipulation, the government introduces a per unit production tax, t = $1. What is the dead weight loss?

DWL = _________

Reference no: EM13303339

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