Question 1: Consumer Surplus & Deadweight Loss Consider the following diagram of supply & demand for
peaches. Suppose that initially the market is in equilibrium.
A) What is the consumer surplus in the free-market for peaches? B) Now, if the government institutes a price floor equal to $10/peach, what is the consumer surplus in the market for peaches? C) What is the deadweight loss associated with the price floor above? What is the excess supply of peaches in this scenario?
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