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Consider a market where supply and demand are given by QXS = -18 + PX and QXd = 90 - 2PX. Suppose the government imposes a price floor of $41, and agrees to purchase any and all units consumers do not buy at the floor price of $41 per unit.
a. Determine the cost to the government of buying firms' unsold units.
b. Compute the lost social welfare (deadweight loss) that stems from the $41 price floor.
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Suppose that the demand curve for apples is given by Qd = 140 - 5P, where Qd is the number of pounds demanded per year and p is the price per pound. The supply of apples can be de
Such analysis permits the firm to determine at what level of operations it will break even (earn zero profit) and to discover the relationship among volume, costs, and profits. It
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While referring to the "EYE on YOUR LIFE" section on page 183 of the textbook, apply this concept to your life. Develop your own policy position on price floors and price ceilings.
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