Economics 101, Problem Set 3 Ungraded Alan C. Marco Instructions. Due at the beginning of lecture (or beforehand in my box in the economics department). I encourage you to work in groups of 2 or 3. Please turn in only one problem set for each group, with the full names of all the students on the front page. Problem sets must be neat, readable, and concise. I prefer typed. They must be stapled if they are more than one page. 1. Suppose market demand is given by P = 100-Q and supply is given by P = 10 + Q. For each situation, solve for the equilibrium, consumer surplus, and producer surplus. (a) The free market equilibrium. (b) A price ceiling is imposed at P = 30 . (c) A price ±oor is imposed at P = 60 . (d) A $10 per unit tax is imposed on suppliers. [Be speci²c about the retail price, price to consumers and suppliers, and quantity.] (e) Which outcome is best for consumers? Producers? 2. Show graphically when the following policies will lead to the (i) lowest and (ii) highest deadweight loss; i.e.,
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This note was uploaded on 04/26/2010 for the course ECON 101 taught by Professor Staff during the Spring '08 term at Vassar.