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economic question The following diagram represents market for a normal good. Demand and Supply Price $10 $9 Quantity $8 Demanded $7 Quantity $6 Supplied $5

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economic question

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The following diagram represents market for a normal good. Demand and Supply Price $10 $9 Quantity $8 Demanded $7 Quantity $6 Supplied $5 $4 $3 $2 $1 $0 0 1 2 3 4 5 6 7 8 9 10 Quantity a) What are equilibrium price and equilibrium quantity? Calculate consumer surplus, producer surplus and total surplus. Show your work b) If the government imposes price ceiling of $2 in this market, will there be a surplus or shortage? Calculate. Show your calculations. c) Calculate consumer surplus and producer surplus when the price ceiling is in place. Show your calculations, show the area of each surplus and DWL on the graph. d) Assume now, that the government imposes a price floor of $7. Calculate the consumer surplus, producer surplus and deadweight loss. Show your calculations

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