1) Equilibrium price = 60 and Equilibrium quantity = 60
CS = 0.5*(120-60)*60 = 1800
PS = 0.5*(60-0)*60 = 1800
TS = 1800+1800 = 3600
2) P=90
CS = 0.5*30*(120-90) = 450
PS = 0.5*30*(30-0) + 30*(90-30) = 2250
Change in CS = 450-1800 = -1350
Change in PS = 2250-1800 = 450
DWL = 3600-2700 = 900
3) P=30
CS = 0.5*30*(120-90) + 30*(90-30) = 2250
Change in CS = 2250-1800 = 450
Change in PS = 450-1800 = -1350
DWL = 900
Refer to a figure that shows the market for backpack to answer the following questions. Price...
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Consider the market for mountain bikes. The following graph shows the demand and supply for mountain bikes before the government imposes any taxes. First, use the black point (plus symbol) to indicate the equilbrium price and quantity of mountain bikes in the absence of a tex. Then use the green point (triangle symbol) to shade the area representing total consumer surplus (CS) at the equilbrium price. Next, use the purple point (dlamond symbol) to shade the area representing total producer...
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