1. If the price of gasoline is set below the equilibrium price by government action there...
1. If the price of gasoline is set below the equilibrium price by government action
|
there will be a surplus of gasoline |
||
|
there will be a shortage of gasoline |
||
|
all buyers will be able to purchase their desired quantities |
||
|
market equilibrium will occur in spite of government regulation |
2. You would be willing to pay a maximum of $100 to attend a football game, and you can buy a ticket for $30. Your consumer surplus is
|
$30 |
||
|
$50 |
||
|
$70 |
||
|
$100 |
Homework Answers
1
There will be a shortage of gasoline as quantity demanded would exceed quantity supplied.
2. $70 ( $100-$30).
Consumer surplus is the area below demand curve and above market price. It is the difference between what consumers are willing to pay and what they actually pay.
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where P is the price (in cents) per pound and Q is the quantity
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Suppose government passes a regulation which makes it illegal
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Please help solve
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