Question: Question3 (30 marks) A person's demand and supply equations for rice per month are as following: Demand: Q = 40 - 5*P Supply : Q

Question3 (30 marks)

A person's demand and supply equations for rice per month are as following:

Demand: Q = 40 - 5*P

Supply : Q = -20 + 10*P

Required:

  1. What are the market equilibrium price ($/kg) and quantity (kgs/month) for rice? (5 marks)
  2. At the market equilibrium price, what are the consumer surplus and producer surplus? (10 marks)
  3. If the rice price rises to $5/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)

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