Question 4 (30 marks)

A persons demand and supply equations for rice per month are as following:

Demand: Q = 40 5*P

Supply : Q = -20 + 10*P

a. What are the market equilibrium price ($/kg) and quantity (kgs/month) for rice? (5 marks)

b. At the market equilibrium price, what are the consumer surplus and producer surplus? (10 marks)

c. If the rice price rises to $6/kg,

what are the consumer surplus and producer surplus? (10 marks)

what is the impact of this rice price increase on the consumers and producers as a whole? (5 marks)