Question: The demand curve is given as: P = 40 - 4Q The supply curve is given as: P = 10 + 2Q. Part a) What

The demand curve is given as: P = 40 - 4Q

The supply curve is given as: P = 10 + 2Q.

Part a)

What are the market competitive equilibrium price and quantity (P* and Q*),Consumer Surplus (CS), and Producer Surplus (PS) without government intervention ?

Part b)

Assume government imposes Price Cap of $15 on the market:

2) What would be the new equilibrium quantity in the market?

3)Whatwould bethe market Consumer Surplus andProducer Surplus?

4) What would be the Hidden Cost?

5) What would be theDeadweight Loss?

Part c)

Assume government imposes Price Floor of $24 on the market:

2) What would be the new equilibrium quantity in the market?

3)Whatwould bethe market Consumer Surplus andProducer Surplus?

4) What would be the Hidden Cost?

5) What would be theDeadweight Loss?

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