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Consider a perfectly competitive market for milk (where 1Q = 100 gallons), with demand curve given by QD = 200 2P and supply curve given
Consider a perfectly competitive market for milk (where 1Q = 100 gallons), with demand curve given by QD = 200 2P and supply curve given by QS = 2P. a.) Find the equilibrium price and quantity of milk exchanged, using the supply function and demand function given above. b.) Draw this equilibrium very carefully, and label each axis; equilibrium price and quantity; consumer surplus; producer surplus; and deadweight loss (if it exists). c.) Calculate the value for consumer surplus, producer surplus, and deadweight loss. Now the government implements a price floor regulation: the price per unit cannot be below $60. d.) Find the new price and quantity of milk exchanged in the market under the price floor. e.) Demonstrate the effects of the law by drawing (on a new graph) and calculating consumer surplus, producer surplus, and deadweight loss
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