E202Solutions5.2 - caves offers a tour each afternoon at...

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a. Calculate the weekly shortage of used DVDs that will result from this policy. Answer : At a price of $7.50, the quantity supplied per week is 2. The quantity demanded at this price is 18 per week, which implies a weekly shortage of 18 - 2 = 16 used DVDs. b. Calculate and graph the total economic surplus lost every week as a result of the price ceiling. Answer : The weekly economic surplus lost as a result of the price ceiling is the area between the demand and supply curves, and between the new quantity exchanged and the equilibrium quantity. 0.5 (11.5 - 7.5) (6 - 2) = 0.5 (4) (4) = $8/wk. 3. The Kubak crystal caves are renowned for their stalactites and stalagmites. The warden of the
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Unformatted text preview: caves offers a tour each afternoon at 2pm sharp. The caves can be shown to only four people per day without disturbing their fragile ecology. Occasionally, however, more than four people want to see the caves on the same day. The following schedule lists the people who wanted to see the caves on September 24, 2003, together with their respective times of arrival and reservation prices for taking the tour that day. Arrival time Reservation price ($) Hermann 1:48 20 Jon 1:50 14 Kate 1:53 30 Jack 1:56 15 Penny 1:57 40 Fran 1:59 12 Faith 2:00 17...
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