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.