Suppose that the demand curve for wheat is Q= 120-10p and the supply curve is Q=10p...

Suppose that the demand curve for wheat is

Q= 120-10p

and the supply curve is

Q=10p

The government imposes a price ceiling p =$ 3 per unit.

a. How do the equilibrium price and quantity change? (round quantities to the nearest integer and round prices to the nearest penny)

The equilibrium quantity without the price ceiling is 60 and the price without the price ceiling is $6.

The equilibrium quantity with the price ceiling is 30.

b. What effect does this ceiling have on consumer surplus, producer surplus, and deadweight loss?

The change in consumer surplus (CS) is _________ (round your answer to the nearest penny).

The change in producer surplus (PS) is _________(round your answer to the nearest penny).

The deadweight loss (DWL) is __________(round your answer to the nearest penny).

Expert Solution

Rahul Sunny answered 2 years ago

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