Question: Suppose that the demand function for pizzas is Qd = 65,800 - 1,200P. The supply function is Qs = 4,000P - 20,000. Suppose the pizza

Suppose that the demand function for pizzas is Qd = 65,800 - 1,200P. The supply function is Qs = 4,000P - 20,000. Suppose the pizza parlor industry is effective at lobbying the government, which institutes a price floor of $15 on pizzas. Assuming that the least-cost pizza producers are the ones to produce the demanded pizzas, what is the effect on the aggregate, consumer, and producer surpluses? What if instead the government raised the price to $15 using a price support program?

Step by Step Solution

★★★★★

3.44 Rating (163 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

Consumer surplus will stay the same producer surplus will stay the same and aggr... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Document Format (1 attachment)

847-B-E-D-S (2923).docx

120 KBs Word File

Students Have Also Explored These Related Economics Questions!

The demand function for drangles is q(p) = (p + 1)2. (a) What is the price elasticity of demand at price p? 2p/(p+1). (b) At what price is the price elasticity of demand for drangles equal to 1? (c)...

Suppose that the demand function for a product is Qd = 200/P and the supply function is Qs = 2P.What is the equilibrium price and the amount bought and sold?

Suppose that the demand function for a product takes the form Qd = (A - BP)D where A, B, and Dare positive numbers. Derive a formula for the elasticity of demand as a function of the price. (Your...

please see the word file I know the answers but how we get that can you help me understanding the steps for chapter 3 &4 SOLUTIONS_REVIEW TEST 1 CHAPTER 1 1) Mathematical Exercises p.36 (1) Using a...

Please take your time to answer the questions below as this is a final and the goal is 100% 1. Suppose the interest rate is 5 percent, the expected growth rate of the firm is 2 percent, and the firm...

Solve the following Question 1 There are 10,000 identical individuals in the market for commodity X, each with a demand function given by Qodx = 12 - 2Px, and 1000 identical producers of commodity X,...

PROBLEMS 1. The following function describes the demand condition for a company that makes caps featuring names of college and professional teams in a variety of sports. Q = 2,000 - 100P where Q is...

I. Which of the following is correct? a) The pivot of the budget line shows the substitution effect while a slope gives the income effect. b) The pivot of the budget line shows the substitution...

tax Consider the market for apple juice. In this market, the supply curve is given by QS = 10PJ 5PA and the demand curve is given by QD = 100 15PJ + 10PT , where J denotes apple juice, A denotes...

Answer the following questions. 2. At this point, we can analyze (stability, steady-state gain, sinusoidal steady-state gains, time-constant, etc.) of first-order, linear dynamical systems. We...

Compute the minimum number of patient visits for each year so that Net Present Value is positive. Assume that the number of visits remains constant each year. A proposal based on cost-benefit...

The Trade Unions International of Public and Allied Employees filed a complaint with the ILO Committee alleging violations of trade union rights in France. The union explained that Mr. Laganier,...

A deposit of $ 1 0 , 0 0 0 now at 1 0 % per year interest will accumulate to how much twenty years from now? A ) $ 3 0 , 0 0 0 B ) $ 4 6 , 2 7 5 C ) $ 6 7 , 2 7 5 D ) $ 8 3 , 1 9

What is the primary purpose of the Perform Integrated Change Control process? a) To integrate all change requests into the project plan b) To review and approve all change requests c) To develop the...

Suppose 100 cars will be offered on the used-car market, 50 of them good cars, each worth $10,000 to a buyer, and 50 of them lemons, each worth $2,000. a. Compute a buyer's maximum willingness to pay...

A firm earns gross profit (profit not including the wage) of 100 from a low-ability worker and 200 from a high-ability worker. A quarter of the workers are low-ability and the rest are high-ability....

An incumbent firm may be a low-cost type, with constant marginal cost of production 10, or a high-cost type, with marginal cost of production 20, with probabilities t and 1 t, respectively. The...

Last week, you sold 3 0 0 shares of ABC stock for $ 6 , 3 0 0 . The sale was a short sale with an initial margin requirement of 7 0 % . The maintenance margin is 4 0 % . Some positive news concerning...

please help 5 Both Bond Sam and Bond Dave have 9 percent coupons, make semiannual payments, and are priced at par value. Bond Sam has five years to maturity, whereas Bond Dave has 18 years to...

6. Why is it best to hold zero coupon bonds in a tax-deferred account like a 401K? A. Zero coupon bonds are tax exempt B. The IRS requires the holders of zero coupon bonds to pay taxes on the...