1. Suppose the demand and supply for gas generators in a coastal Florida town are as...

1. Suppose the demand and supply for gas generators in a coastal Florida town are as follows:

Q_d = 1800 – 3P

Q_s = 2P – 200.

a. Find the equilibrium price and quantity of generators.

b. Find the consumer surplus, producer surplus, and total gains from trade at the equilibrium price.

c. Question 2 asks you to consider the economic impacts of “price gouging.” Price gouging refers to suppliers raising their prices on essential goods (bottled water, gas, generators, airline tickets) during a crisis. Using the links that follow or a Google search, describe the costs and benefits of price gouging as described by economists. Then, discuss your opinion on the issue.

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Expert Solution

Rahul Sunny answered 9 months ago

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