Question
As an agricultural economics consultant you are analyzing the current market for grain. You are able to determine that market demand and supply functions are
As an agricultural economics consultant you are analyzing the current market for grain. You are able to determine that market demand and supply functions are as follows: Demand:Qd(P)=80 1/3P Supply: Qs(P) = 1/2P
Due to government interference in this market the resulting price and quantity are P 1 = 70 and Q1 = 35, repectively.
(a) Graph the market again, this time labeling the deadweight loss on your graph.
(b) Calculate the deadweight loss.
(c) What is a deadweight loss? How does it impact producer and consumer surplus?
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International Economics
Authors: Robert C. Feenstra, Alan M. Taylor
3rd edition
978-1429278515, 142927851X, 978-1319029517, 1319029515, 978-1429278447
