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2. Consider the Pittsburgh pierogi market from above again and focus on the short-run scenario with 20 firms. a. Draw on a graph the market
2. Consider the Pittsburgh pierogi market from above again and focus on the short-run scenario with 20 firms. a. Draw on a graph the market demand and the short run supply. Label the equilibrium, the consumer surplus, and the producer surplus. b. Calculate the consumer and producer surplus in equilibrium. [HINT: Use that the area ofa triangle is (base*height)/2.] c. Suppose now that Mayor Peduto, in an effort to make pierogies available to all Pittsburghers, imposes a price ceiling of $5 on pierogies sold. Determine the new equilibrium price and quantity. d. Determine the change in consumer surplus, producer surplus, and the deadweight loss associated with the introduction of the price ceiling. e. Has Mayor Peduto's policy that lowers the price of pierogies improved the welfare of Pittsburghers
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