PS3 - FIN 501 Problem Set #3 This problem set will not be...

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FIN 501 Problem Set #3 This problem set will not be turned in for credit. However, the material on this problem set is eligible for the first midterm examination. So, you should work the problems and study the solutions before the midterm. SOLUTIONS WILL BE DISTRIBUTED. In these problems it is permissible (although not necessary) for the answers to be fractional numbers. For all problems show your work. Please include the names of your group members on your write-up. 1. Suppose that demand in the market for financial economics books is QD = 1000-3P and supply is QS =200+9P. a) In equilibrium, what will be the price of a book? How many books will sell at this price? b) What is the value of consumer surplus at equilibrium? c) What is the value of producer Surplus at equilibrium? d) Suppose that the government imposed a $40 ceiling on financial economics books. What happens to the quantity sold? e) What is consumer surplus now? What is producer surplus? What is the “deadweight loss” from this policy? 2.
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PS3 - FIN 501 Problem Set #3 This problem set will not be...

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