Micro economics

2. Assume that the market for Yak Fat coats, very warm in the winter, in Tibet is perfectly competitive and in long run equilibrium. a) Using a correctly labeled graph of supply and demand, show each of the following: 1 . The equilibrium price label P1 and the quantity labeled Q1 ii. The area representing total consumer surplus, labeled CS The area representing total producer surplus, labeled PS b) Supposes the government places a price ceiling on this market. Redraw your graph and label the ceiling as Pc. Shade the area of total surplus after the imposition of the ceiling. (Hint, remember what I said about surplus and production) c) Suppose the demand for Yak Fat coats decreases, it's a warm winter in Tibet, but the price ceiling remains in effect, indicate what will happen to the following after the shift of demand: i. Consumer surplus ii. Producer Surplus