Question

Price per Gallon Supply Demand 20 40 60 80 100 120 140 Blueberries (in gallons) The government, hoping to encourage the consumption of the highly nutritious super food, is considering imposing a price ceiling at $5 per gallon of blueberries. Identify the equilibrium price and quantity of blueberries before the introduction of a price ceiling. Identify and quantify the effect of imposing a price ceiling at $5 per gallon on: 1) the quantity of blueberries that get bought and sold, 2) any existing shortage or surplus of blueberries, 3) consumer surplus, 4) producer surplus, and 5) total surplus. Be careful to put your answers in the correct units.

Answer 1

ANSWER price = $6 and equilibrium before price ceiling equilibrium quantity. 8o Blueberries (gellows a situation where quantity demand equals Equilibrium refers to Quanarty supply. o poice ceiling $5. Gallon. Surplus per Consumer price supply 8 +- price ceiling = 85 --- Demand > 20 40 60 140 producer surples. 80 90 100 120 Blueberries

that bought 9o blue bessies and (1) the quantity of blueberries Solda 60 blueberries. quantity demand is greater than (22 There in shortage because quantity supply. shootage 90-60 - 30 units 3) consumer Surplus x (14-8) X (600) - $180 (60-0) (8-5)x = 3x60 = $180 So consumer supplas do +180 = $360 (4) producer Surplus = 5-20 x (606) - 1x 34 to $90 so producer surplus 890 surplust producer surplus 15 Total surplus consumer . 360 +90 so Total surplus = $450