Question

10 11 1U U JU11CI1115 VIVER 19. Consider the (inverse demand and supply functions, respectively pra by Qa=300-10P (or P=30-(1/10)Qd) and Qs=20P (or P=(1/20)Qs). a. Graphically illustrate and label the market, equilibrium, and es welfare (i.e. CS, PS, TS, DWL). b. Numerically calculate the CS, PS, TS, and DWL. noti

Answer 1

Demande . for d = 300-lop I P=30, do=o I Pro ; & ": 300 supply : Is=20p for pro, d=0 pelo, of 2200 a E hraphing the demand a supply enover: Price a 30 th cluantity demanded Quantity supplied 5. 100 in doo 250 30 It too in do in the counting Eu Equilibinum point Area under the demand cune a above the equilibrium - price is known as consumer surplos. Area of A AEF is consumer surplus. Area above the supply cure & below the equilibinum - price is known as producer surplus. Area of a OFE is is producer surplus. The sum of consumer surplus A producer surplus is Total surplus. Ar of A AEO is total perplan.

- no Deadweight loss in this case. W b) Consumer surplus = LLLLLLLLL Ar A AFE -(AF) (FE) (30-40) fees) = د ده لے L LalalalalSSION Producer surples = Ar A ofe 54 (Of) (FE) = { 1102 (een) a love Total surplus Consumer surplast Producer surplus 2000 + 1000 = 3000 Dead weight loss (DL) a o