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Consider a market where supply and demand are given by 0x5 = 14 + PX and Qxd = 85 - 2Px. Suppose the government imposes
Consider a market where supply and demand are given by 0x5 = 14 + PX and Qxd = 85 - 2Px. Suppose the government imposes a price floor of $38, and agrees to purchase and discard any and all units consumers do not buy at the floor price of $38 per unit. a. Determine the cost to the government of buying firms' unsold units. $|:| b. Compute the lost social welfare (deadweight loss) that stems from the $38 price floor. $|:|
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