The magnitude of deadweight loss from the price ceiling

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Reference no: EM13987019

Suppose the government imposes a price ceiling of $50 on a market characterized by the following information:

Qd = 700 - 2P Qs = 100 + 4P

[Note: P = price per unit; Qd = hundreds of units demanded; Qs = hundreds of units supplied]

Calculate the magnitude of deadweight loss from the price ceiling. Find a price floor that will result in the same magnitude of deadweight loss.

Reference no: EM13987019

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