Consider the following situation after a government intervention. In this market, the quantity demanded is zero when the price is above 200 and quantity supplied is zero when the price is zero. Before the government intervention, the market equilibrium quantity and price were 100 and 10. After the government imposed a tax of $2 per unit, the price to consumers increased to $11 and only 90 units were

a. Calculate the consumer surplus after the government intervention.

b. Calculate the producer surplus after the government intervention.

c. Calculate the deadweight loss created by this policy

Answer rating: 100% (QA)

Calculating Consumer Surplus Producer Surplus and Deadweight Loss Given Demand Qd 200 P P being pric... View the full answer