In a perfectly competitive market of macaroons, the demand is given by = 365 2 and the supply is given by = 1 + 4 .

a. (2p) What is the price and quantity in equilibrium, in the absence of government intervention?

b. (3p) What is the Consumer Surplus (CS), the Producer Surplus (PS), and the Net Economic Benefits (NEB) in the above equilibrium?

c. (5p) The government imposes a price ceiling of $50. C1. What is the quantity in equilibrium? C2. What is the consumer surplus? C3. What is the producer surplus? C4. What is the deadweight loss? C5. Due to this policy some amount from the original total surplus moves from consumers to producers or from producers to consumers (the transfer). What is the transfer here? Who gets it?