Competitive cell phone market has demand curve

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Assume that a competitive cell phone market has a demand curve described by the equation

P = 45 − (2)Q and a supply curve described by P = 5 + (2)Q.

(a) What are the consumer and producer surpluses in this market?

(b) What is the deadweight loss (DWL) if a price ceiling is set at Pmax = $19?

(c) Does either the consumer or producer surplus increase with the price ceiling imposed in (b)? Be sure to show your calculations and reasoning.

Reference no: EM131380163

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