Homework Answers
9) When there is price floor, it implies that the price cannot be below this floor and hence there would be an increase in producer surplus. But there would also be deadweight loss.
Area of producer surplus = Area of trapezium
= Area of rectangle $5 and $20 +ARea of triangle between $4 and $5
= (length*breadth)+(1/2*base*height)
=(20-5)*(20)+1/2(5-4)*20
=15*20+1/2*20
=300+10
=$310
Hence answer would be option C)$310
10) Total surplus= Consumer surplus+Producer surplus
= Area of triangle between $14 and $22 + [Area of rectangle between $14 and $8 + area of triangle between $8 and $4]
=1/2*b*h+[length*breadth+1/2*b*h]
=1/2*(22-14)*80+[(14-8)*80+(1/2*(8-4)*80)]
=1/2*8*80+[6*80+(1/2*4*80)]
=320+[480+160]
=960
Hence answer is option C)960
(You can comment for doubts)
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