Change in consumer and producer surplus from price controls, Microeconomics

Assignment Help:

Change in consumer and  producer surplus from price controls

* Observations:

- The loss is equal to area B + C.

- The change in surplus = (A - B) + (-A - C) = -B - C

- The deadweight loss is inefficiency of price controls or loss of the producer surplus exceeds the gain from consumer surplus.

* Observation

- Consumers can experience net loss in consumer surplus when demand is inelastic enough

Effect of Price Controls When the Demand Is Inelastic

965_effect of price control.png

Price Controls and Natural Gas Shortages

1055_effect of price control1.png


Related Discussions:- Change in consumer and producer surplus from price controls

Capital intensive operations, Where minimum efficient scale is very huge fo...

Where minimum efficient scale is very huge for capital intensive operations, it may be more cost effective to allow one company to spread its fixed costs over a very huge number of

Cost of job loss, When a worker is fired orlaid off, they experience a sign...

When a worker is fired orlaid off, they experience a significant out-of-pocket cost. That cost of job loss relies on how much they were earning in their job, how long it takes them

What defines the fact that the value of global production, What defines the...

What defines the fact that the value of global production has grown by a factor of 4.6, while the value of global production per capita has grown by a factor of 2? The enhance

Features of bureaucracy, Features of bureaucracy: Impersonal Order: ...

Features of bureaucracy: Impersonal Order: The authority is inherent in the post and not the individual who performs the official role. An official is supposed to have a det

Explain why despite decreases in marginal cost, Problem 1: How can a ma...

Problem 1: How can a manager of a supermarket maximise total revenue using various concepts of elasticity of demand? Use examples to illustrate. Problem 2: What are the

Pp curve, how does pp curve solve the problem of how to produce, what yo pr...

how does pp curve solve the problem of how to produce, what yo produce, and when to produce?

Ic, consumer equilibrium by indiffrence curve approach

consumer equilibrium by indiffrence curve approach

Discuss shortnote on morality and ethics , Economics and Ethics : Morality ...

Economics and Ethics : Morality and ethics are powerful motivations to behavior.  Thouh, economists suppose that rationality is a function of demonstrable self-interest.  That mean

Derive the linear demand and supply, Suppose that the short-run world deman...

Suppose that the short-run world demand and supply elasticities for crude oil are -0.076 and 0.088, respectively. The current price per barrel is $30 and the short -run equilibrium

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd