ECON 103, Fall 2008Simon Fraser UniversityAssignment 3Due in tutorials in the week of November3RD.Problem 18 from Ch. 10of the required textbook. (3 points)True or False.If either supply or demand is perfectly inelastic, a per unit tax on producerswill not create any dead weight loss1. (3 points, use diagrams for full marks)Problem 1. (4 points).Market demand isPD= 15-.75Qand market supply isPS=.25Q.a) Suppose government imposes a quota of 10 units. Calculate the market price and quantityafter the quota is imposed. Use a diagram to show the welfare impact of the quota: whogained and who lost as a result of the quota, show the dead weight loss on the diagram.b) Now suppose that government introduces a price floor in this market: the price is notallowed to go below 7.5. What will be resulting market price and quantity in this case?Show the impact of this policy on a diagram..Problem 2.(10 points)Consider a competitive market with demand given byPD= 100-2Qand supply given byPS= 10 +Q.
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