1. Consider an industry with a supply function given by Q =−300 + 15P . The...
1. Consider an industry with a supply function given by Q =−300 + 15P .
The market demand function is given by P = $25
(a) Draw a diagram that shows producer surplus and variable cost at the
equilibrium point. (make sure to indicate euilibrium quantity).
(b) Compute the producer surplus and variable cost of the industry at
the equilibrium point.
(c) What’s the consumer surplus at the equilibrium price? Why?
(d) What effect on consumer and producer surplus (welfare) would a
government total market production limit of q=50 have?
Homework Answers
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1. Consider an industry with a supply function given by Q =−300
+ 15P .
The...
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