sketch the following demand and supply curves: Demand is given by P=12-Q and supply is given...

  

Transcribed Image Text:

sketch the following demand and supply curves: Demand is given by P=12-Q and supply is given by P=2+Q. This means the demand curve stretches from the points (0,12) to (12, 0) and the supply curve is a ray emanating from (0,2) with slope of 1 crossing the demand curve at the point (5, 7). a. Compute the consumer and producer surplus at the equilibrium price. b. Compute the consumer and producer surplus if a price floor of $9 is imposed on this market. c. Compute the consumer and producer surplus if a price ceiling of $9 is imposed on this market. 2. Ben values each latte at $12 and purchases two for $3 each from the local cafe whose costs are $1 per latte. a. How much economic surplus is created as a result of this transaction? b. What's Ben's consumer surplus and what's the producer surplus gained by the cafe? sketch the following demand and supply curves: Demand is given by P=12-Q and supply is given by P=2+Q. This means the demand curve stretches from the points (0,12) to (12, 0) and the supply curve is a ray emanating from (0,2) with slope of 1 crossing the demand curve at the point (5, 7). a. Compute the consumer and producer surplus at the equilibrium price. b. Compute the consumer and producer surplus if a price floor of $9 is imposed on this market. c. Compute the consumer and producer surplus if a price ceiling of $9 is imposed on this market. 2. Ben values each latte at $12 and purchases two for $3 each from the local cafe whose costs are $1 per latte. a. How much economic surplus is created as a result of this transaction? b. What's Ben's consumer surplus and what's the producer surplus gained by the cafe?