Consider a market where supply and demand are given Qx^s=-10 +Px
and Qx^d= 56-2Px. Suppose the government imposes a price floor of $25, and agrees to purchase any and all units concumers do not buy at the floor price of $235 per unit.

a. Determine the cost to the government of buying firms' unsold units.
b. Compute the lost social welfare (deadweight loss) that stems from the $25 price floor.

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glorysoft2Lv10

1 Oct 2022

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Related questions

Consider a market where supply and demand are given by QXS = -16 + PX and QXd = 83 - 2PX. Suppose the government imposes a price floor of $40 and agrees to purchase any units consumers do not buy at the floor price of $40 per unit. Assume that the government simply removes a product from the market through its purchase

a. Determine the cost to the government of buying firms' unsold units.

b. Compute the lost social welfare (deadweight loss) that stems from the $40 price floor.

Can someone please show me how to do this?

ivorymuskrat92

Consider a market where supply and demand are given by Q_X^S = -14 + P_X and Q_X^d = 76 - 2P_X. Suppose the government imposes a price floor of $35, and agrees to purchase and discard any and all units consumers do not buy at the floor price of $35 per unit.

Instructions: Enter your responses rounded to the nearest penny (two decimal places).

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