Question: Part A: Using a demand-supply graph, explain how mandatory business closure due to COVID19 will impact consumer and produce surplus if the demand curve is

Part A: Using a demand-supply graph, explain how mandatory business closure due to COVID19 will impact consumer and produce surplus if the demand curve is inelastic.

Part B: Assume that business firms taking advantage of the COVID19 crisis impose a constant wedge (w) on all prices. Explain using another demand-supply graph the impact of such a price gorging on consumer and producer surpluses; and compute the dead weight loss if elasticity of demand (ed) is -0.4, that of supply (es) = 0.7 and original P₀ and Q₀ were 2, 15, respectively.

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