Hi,

Can you please help me with this exercise ?

The market demand and supply equations for a product are

Qd = 300 3P

Qs = 100 + 5P

a. Calculate the equilibrium price and quantity for this product?

b. Suppose that an increase in consumer income increases demand to

Qd = 420 3P

What are the new equilibrium price and quantity for this product? What

is the value of net social welfare as a result of the increase in demand?

c. What is the value of net social welfare as a result of the increase in demand?

d. Suppose that the government imposes a price ceiling that is equal to the

original equilibrium price. What is the result of this legislation?

e. Calculate the change in the value of net social welfare after the imposition

of the price ceiling.