1. Suppose that the market for bottled water is characterized by an upward-sloping supply curve and a downward sloping demand curve. In the absence of the government intervention, the market clears at price p* and quantity Q'. Now the government imposes a binding price ceiling in the market for bottled water. a) Show the welfare effects of the binding price ceiling. Specifically, identify consumer surplus, producer surplus, and social surplus before and after the price ceiling is implemented. Now suppose that instead of an upward-sloping supply curve, the supply curve for bottled water is more accurately characterized by a perfectly inelastic supply curve at the quantity Q* b) Given this alternative characterization of the supply curve, identify the consumer surplus before and after the price ceiling. Eli, an economics student at another ivy-leaque university, arques that the change in consumer surplus in part A is identical to the change in consumer surplus in part B. He cites two facts to support his argument. Fact 1) The demand curves, which represent consumers. willingness to pay for bottled water, are the same in part A as in part B. Fact 2) The price the consumer pays after the price ceiling is the same in part A as in part B. c) Do you agree with Eli? If so, why? If not, why not? Be sure to say whether Eli got his facts wrong. Also, mention any facts critical to your argument that Eli left out