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Please help ?!? Question 11 (Challenging). The town of Noveria famous for its ice cream has recently received a number of complaints from its local

Please help ?!?

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Question 11 (Challenging). The town of Noveria famous for its ice cream has recently received a number of complaints from its local consumers requesting assistance from the government as competition has forced the market price too high. A market analyst finds the aggregate supply curve to be P = 5 l Q and the aggregate demand curve to be P = 65 30. a) What is the current equilibrium price and quantity? As a means to solve these complaints the government implements a policy that will fix the price $5 below this equilibrium. a) Is this more likely to be a price floor or price ceiling? b) What is the new equilibrium? c) Which parties gain/lose surplus from this? How much? and how are local consumers going to react to the implementation of this policy? An alternative to this is to implement a subsidy to consumers at $5 per unit purchased. a) What is the new equilibrium? b) Which parties gain/lose surplus from this? How much? and how are local consumers going to react to the implementation of this policy? The government decides to move fonivard with the first policy. Shortly after implementation the government decides that it needs to find a way to reduce deadweight loss in the market. a) Since the government knows that simply reverting to a free market will cause the complaints to start again is there a way the government increase total surplus without making anyone worse off

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