ECON501HW4 - ECON501 HW4 1 Suppose that the market demand...

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ECON501 HW4 1. Suppose that the market demand curve for apartments in Columbus is given by D Q P 2 000 , 1 - = and the market supply is given by S Q P 3 = a. What is the consumer surplus? b. What is the producer surplus? c. Suppose that rent control is imposed so that the maximum price that can be charged for apartments is P=500. What is the deadweight loss due to the price ceiling? 2. Suppose that the market demand for cigarettes is D Q P 2 . 0 10 - = and the market supply is S Q P 2 . 0 2 + = a. What is the consumer surplus? b. What is the producer surplus? c. Suppose a tax of $2 is imposed on each pack of cigarettes so that the after-tax demand for cigarettes from the perspective of sellers is Q P 2 . 0 8 - = What is the price paid by consumers? What is the price received by the sellers? d. How much revenue is collected from the tax? e. What is the deadweight loss due to the tax? 3. The United States’ domestic supply and demand for vegetable fiber at various prices are given in the table below:
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ECON501HW4 - ECON501 HW4 1 Suppose that the market demand...

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