Suppose a market is characterized by a representative consumer with demand of the form: Q D=500-5P I
Suppose a market is characterized by a representative consumer with demand of the form: Q D=500-5P In the short-run, the market has 10 competing firms with individual supply qS=5+P
A) Determine the short-run firm supply curve (10 marks)
B) What is the short-run equilibrium price and quantity? (10 marks) C) Determine consumer surplus, producer surplus, and dead weight loss (10 marks) D) Suppose a price floor of P=50 is imposed What is the equilibrium price, equilibrium quantity, consumer surplus, and producer surplus? (10 marks) E) Is the imposition of a price floor a Potential Pareto Improvement? How do you know? Does any party benefit from the imposition of a price floor? (10 marks)