ps8s08 - a Plot the curves on a graph What is the market...

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Page 1/1 UNIVERSITY OF WISCONSIN Economics 101 – Spring 2008 Problem Set 8 Due on April 14 at noon (Notice: most of the material in this problem set will be covered during this week’s lectures. So, you may want to wait until your discussions to start doing it.) Please be sure to include (1) your name, (2) your teaching assistant s name, and (3) your section time on your answers. Please staple pages together. Also note that late homework will not be accepted. Remember that you can help each other but each student has to hand a hand-written solution of the problem set. F you hand back your problem set to your TA s mailbox, it is absolutely prohibited to look at problem sets that have already been placed there. This practice will be considered a form of cheating and will be dealt with accordingly. 1. Suppose the market for rice can be described by the following equations: Demand: Qd=5500-5P Supply: Qs = 6P
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Unformatted text preview: a) Plot the curves on a graph. What is the market equilibrium price and quantity? b) What are the Consumer Surplus and Producer Surplus in the market equilibrium? c) If the government establishes a price floor of $700, how many rice will be sold? How much excess supply we will have? d) Suppose the market is currently in equilibrium. If the government establishes a price floor of $700 but doesn ’ t purchase any excess supply, what is the new consumer surplus and producer surplus? What is the deadweight loss of this policy? Indicate the change in the consumer surplus and producer surplus on the graph. e) If the government establishes a price floor of $700 and purchases any production surplus, what will be the producer surplus and the consumer surplus now? What is the deadweight loss? Show your results on the graph. 2. Question 2, page 333 in the book. 3. Question 7, page 334 in the book....
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This note was uploaded on 08/08/2008 for the course ECON 101 taught by Professor Hansen during the Spring '07 term at University of Wisconsin.

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