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Consider the following supply and demand equations: Supply: p = 10 + q Demand: p =...

  1. Consider the following supply and demand equations:

Supply: p = 10 + q

Demand: p = 100 − 2q

Show your work as you respond to the following questions.

  1. What are the market equilibrium price and quantity? (5%)
  2. What is the Total Surplus at equilibrium? (5%)
  3. The government enacts a price ceiling at ¯p = 50. What is the Total Surplus? (5%)
  4. Calculate the Consumer Surplus under a price ceiling of ¯p = 20. (5%)
  5. What is the Deadweight Loss under a price ceiling of ¯p = 10?

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Expert Solution

Rahul Sunny answered 1 year ago
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