Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

(c) Supposed that: I the demand function for alcohol-based hand sanitizer last week was P=100- 0.08Q and I the supply function was P=0.0ZQ, where P

image text in transcribed
image text in transcribed
(c) Supposed that: I the demand function for alcohol-based hand sanitizer last week was P=100- 0.08Q and I the supply function was P=0.0ZQ, where P is measured in dollar ($) and Q is measured as number of bottles of alcohol-based hand sanitizer sold per week. (i) Calculate the price and quantity in equilibrium for the alcohol-based hand sanitizer market. Further supposed that government decided to regulate the market by setting a price ceiling at $10 per bottle. (ii) Evaluate the potential outcomes of such a price regulation in terms of market efciency while assuming that there are no black markets for alcohol-based hand sanitizer. Be specific about the well-being of consumers, producers and the society by using proper diagrams. In addition, soon after the price regulation, a vaccine for the virus was invented which can reduce the risk of infection to a large extent. (iii) Discuss with diagrams potential changes in the market equilibrium after the invention of vaccine by assuming that the price ceiling at $10 and the supply of hand sanitizer remains the same. (15 Marks)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Business Driven Technology

Authors: Paige Baltzan

8th Edition

1259924920, 978-1259924927

More Books

Students also viewed these Economics questions