The Maxwell School

Syracuse University

Syracuse University

A market is now in equilibrum at P=2000, Q=10,000.

The elasticity of supply is 0.2

The elasticity of demand is -0.5

A price ceiling of $1500 is under consideration.

Determine the transfer from producers to consumers that would result from the ceiling. Note: you only need to compute the transfer, not the entire change in surplus.

Determine the overall effect on consumer surplus.

Determine the deadweight loss from the policy.

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URL: https://wilcoxen.maxwell.insightworks.com/pages/3200.html

Peter J Wilcoxen, The Maxwell School, Syracuse University

Revised 08/17/2016

URL: https://wilcoxen.maxwell.insightworks.com/pages/3200.html

Peter J Wilcoxen, The Maxwell School, Syracuse University

Revised 08/17/2016