The demand for coffee in a city is given by =6,0002,000, where P is the price of a coffee in dollars and Q is thousands of coffees per day. The corresponding supply is given by =1,000+3,000.

a) Calculate the equilibrium price and quantity, and consumer surplus, and producer surplus. Indicate the consumer surplus and producer surplus in the graph. (Label the axis and curves) b) Calculate the price elasticity of demand and the price elasticity of supply at the equilibrium price and quantity. c) If the city sets a 1-dollar price ceiling on coffee. How would the policy affect the price paid by consumers for coffee? How would it affect the quantity consumed? Indicate the price ceiling, and the consumer surplus, producer surplus in a new graph (label the axis and curves). d) Calculate the consumer surplus received by coffee drinkers and the producer surplus received by coffee drinker after the 1-dollar price ceiling is imposed.

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