Fantaa is the only soft drinks manufacturer in Country V. Weekly, Fantaa is able to produce 6.34 million cans of soft drinks. Residents in Country
Fantaa is the only soft drinks manufacturer in Country V. Weekly, Fantaa is able to produce 6.34 million cans of soft drinks. Residents in Country V loves Fantaa's soft drinks and consume all 6.34 million cans of soft drinks. The market-clearing price is $0.89 per can. Answer the following questions: a. When the domestic supply and demand for soft drinks in Country V are equal, the market is? . Type E for in Equilibrium, M for needing More suppliers, U for Unable to make a conclusion or P for totally impossible and only theoretical. b. Health experts in Country V found that it is extremely unhealthy to consume a large number of soft drinks. They decided to lobby and pressure the government to implement a price floor of $1.33 per can of soft drink. If the price oor is implemented, it is expected that the quantity demanded for Fantaa's soft drinks will drop to 4.95 million cans. It is given that the opportunity cost of producing the last can of soft drink at 4.95 million cans is $0.55 per can. Assuming the price oor is successfully implemented, what is the amount of consumer surplus being converted to producer surplus when the price is increased from $0.89 per can to $1.33 per can? $ million. Answer in millions to two decimal places. c. With an increase in prices for locally produced soft drinks, consumers started looking to the black market for cheaper imported soft drinks (that are not affected by the price oor). Will the existence of this black market likely increase or decrease the consumer surplus? Type | for Increase or D for Decrease
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