If demand for toys is QD = 500 – 10P and supply is Qs = 100...

If demand for toys is QD = 500 – 10P and supply is Qs = 100 + 10P, answer the following questions using calculus:

a. If the government imposes a restriction that price per toy cannot exceed $15, calculate the ΔCS, ΔPS, and DWL from the price ceiling.

b. If the government imposes a restriction that price per toy cannot be lower than $18, calculate the ΔCS, ΔPS, and DWL from the price floor.

c. If the government promises toy producers a price of $25 per unit and will buy up any excess supply to support that price, calculate the ΔCS, ΔPS, and DWL from the price support.

d. If the government promises toy producers a price of $22 per unit and will pay the difference between $22 and the price producers receive from consumers, calculate the ΔCS, ΔPS, and DWL from the price support.

Expert Solution

Rahul Sunny answered 8 months ago

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