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Use the accompanying graph to answer these questions

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Use the accompanying graph to answer these questions;a. Suppose demand is D and supply is S0. If a price ceiling of $6 is imposed, what is the resulting shortage?;b. Suppose demand is D and supply is S0. If a price floor of $12 is imposed, what is the resulting surplus? What is the cost to the government of purchasing any and all unsold units?;c. Suppose demand is D and supply is S0, so that the equilibrium price is $10. If an excise tax of $6 is imposed on this product, what happens to the equilibrium price paid by consumers? The price received by producers? The number of units sold?;d. Calculate the level of consumer and producer surplus when demand and supply are given by D and S0 respectively?;e. Suppose demand is D and supply is S0. Would a price ceiling of $2 benefit any consumers? Explain.

 

Paper#30642 | Written in 18-Jul-2015

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