Calculate the net change in producer surplus

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The market for Sugar beet is in equilibrium at P = $15 and Q = 229995. The price elasticity of demand is -1. The price elasticity of supply is 0.6. Now assume that the government imposes a quota which reduces supply to 183,996

a. Graph this market. Hint: use price elasticity equations to find change in p.

b. Calculate the change in consumer surplus as a result of this policy. Label this area on your graph.

c. Calculate the net change in producer surplus as a result of this policy. Label this area on your graph.

d. Calculate the deadweight loss which would result from this policy. Label this area.

e. Calculate the amount of surplus transferred from consumers to producers.

Reference no: EM13688802

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