In the market for a particular product, the price elasticity of demand is -14/9, and the...

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In the market for a particular product, the price elasticity of demand is -14/9, and the price elasticity of supply is +3. At equilibrium, price is 22 (in dollars) and quantity consumed is 32 (in thousands). (a) Assuming supply and demand are linear, reconstruct and draw the supply and demand curves. Label the intercepts. (b) To help consumers and produces, the government subsidizes the product by $1.5 per unit. What are the prices paid by buyers PB and prices received by seller Ps after the subsidy? What is the new equilibrium quantity? Illustrate them on the same graph. (c) How big is the change in consumer surplus, producer surplus, government expenditure, and deadweight loss? In the market for a particular product, the price elasticity of demand is -14/9, and the price elasticity of supply is +3. At equilibrium, price is 22 (in dollars) and quantity consumed is 32 (in thousands). (a) Assuming supply and demand are linear, reconstruct and draw the supply and demand curves. Label the intercepts. (b) To help consumers and produces, the government subsidizes the product by $1.5 per unit. What are the prices paid by buyers PB and prices received by seller Ps after the subsidy? What is the new equilibrium quantity? Illustrate them on the same graph. (c) How big is the change in consumer surplus, producer surplus, government expenditure, and deadweight loss?

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The market for the product is in a state of pricequantity equilibrium where the price and quantity consumed have stabilized and are not changing with time The price elasticity of demand is 149 which m... View the full answer