Question

a. Draw supply curve and demand curve for vitamins, with the equilibrium price at $13.00 per bottle, and show the consumer surplus and producer plus when the market price is at the equilibrium. b. Suppose that the government believe that this price is too high to promote good health among its citizens, and installs a price ceiling of $10.00 per bottle. Show the effect of this policy on consumer and producer surplus, and label any deadweight loss created by the policy. c. If the government installs a price ceiling of $14.00 per bottle, show the effect of this policy on consumer and producer surplus.