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WEEK2: Problem Solving in economics: Equilibrium and welfare analysis Suppose the supply curve for soap is as follows: Supply: QS= 1550 + 240P The price
WEEK2: Problem Solving in economics: Equilibrium and welfare analysisSuppose the supply curve forsoapis as follows:
Supply: QS= 1550 + 240P
The price of soap is measured in dollars while quantity is measured per piece. The demand is given by the following
Demand: QD= 3550 - 260P
- Can we find themarket-clearing/equilibrium price?
- What is the quantity sold at the equilibrium price?
- Find out the consumer surplus at the equilibrium price.
- Find out the producer surplus at the equilibrium price.
- Find out the total welfare generated by the market.
- Does the equilibrium price maximise the total welfare? Is there any deadweight loss at the equilibrium price?
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