4.Consider a perfectly elastic demand (horizontal) demand curve, which intersects a perfectly inelastic (vertical) supply curve at a price ofp= 1,397, and a quantity ofq= 3. What is the Consumer Surplus? What is the Producer Surplus?

In Italy, COVID-19 special commissioner Domenico Arcuri announced that surgical face masks must be sold at no more than 50 European cents (76 cents CAD) plus tax. What short-term impacts do you expect this will have on the market for surgical masks in Italy?

Sometimes, a price ceiling canincreaseConsumer Surplus compared to the market equilibrium. Under what conditions does this occur, and how does this relate to the elasticity of demand?