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How does an increase in price affect the consumer surplus

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Reference no: EM131198520

In a competitive market, the market demand curve is Q = 28-2p and the market supply curve is Qs = -8 + 2p. Use a spreadsheet to answer the following questions.

a. Determine the quantity demanded and quantity supplied for p = $4, 5, 6…, 14. Determine the equilibrium quantity and price.

b. For prices p = $4, 5, 6, …., 14, determine the consumer surplus. How does an increase in price affect the consumer surplus.

c. For prices p = $4, 5, 6, …., 14, determine the producer surplus. How does an increase in price affect the producer surplus.

d. Suppose the government limits the quantity traded in the market to 6 units. Calculate the resulting deadweight loss.

Quantity Demanded     Quantity Supplied    Price

Reference no: EM131198520

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